When the Fed Buys a Security from a Financial Firm

question 98

Multiple Choice

When the Fed buys a security from a financial firm and the financial firm agrees to buy back the security the next day,the transaction is known as

• A)a repurchase agreement.
• B)a reverse repurchase agreement.
• C)an open market flip-flop.
• D)a federal funds swap.

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Definitions:

Sales

The total revenue generated from goods or services sold by a company during a particular period.

Combined Residual Income

The total leftover income from various projects or divisions after accounting for required rate of return or capital costs.

Required Rate Of Return

The minimum expected yield by investors to justify the risk of an investment.

Investment Opportunity

An investment opportunity refers to potentially lucrative financial ventures or assets that individuals or entities can invest in, aiming for future monetary returns.