Suppose That in June, When the 90-Day BBSW Is 5

question 48

Multiple Choice

Suppose that in June, when the 90-day BBSW is 5%, the prices for the September and December BAB futures contracts are 95.10 and 95.15, respectively.

• A)The 180-day rate will be 4.85%.
• B)The 90-day rate is expected to be 4.90% in September.
• C)The 180-day rate will be 4.95%.
• D)The futures market expects the RBA will cut the cash rate by 25 basis points in September.
• E)There would be a normal yield curve in the money market.

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Definitions:

Income Splitting

A tax strategy used to transfer income from a higher-tax-rate taxpayer to a lower-tax-rate taxpayer to reduce the total tax paid.

Salary Allowances

Additional monetary benefits provided to employees on top of their regular salary, potentially for specific purposes or expenses.

Capital Account

An account on a country's balance of payments that records transactions involving the purchase and sale of assets, representing changes in ownership of international assets.

Partnership Agreement

A contract between partners in a business that outlines the terms of the partnership, roles, and share of profits or losses.