The RBA's Uses Open Market Operations

question 29

Multiple Choice

The RBA's uses open market operations:

• A)once a month, if the cash rate is changed
• B)to increase the cash rate by buying securities from ADIs and other dealers
• C)to decrease the cash rate by selling securities to ADIs and other dealers
• D)daily, to maintain the cash rate at its target.
• E)All of these.

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Definitions:

Equity Multiplier

The equity multiplier is a financial ratio that measures the proportion of a company's total assets financed by its shareholders' equity.

Price-earnings Ratio

A valuation metric for stocks, calculated by dividing the current market price of a stock by its earnings per share (EPS).

Debt-to-equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets, typically used to assess leverage and financial health.

Times Interest

A financial ratio, also known as interest coverage ratio, that measures a company's ability to meet its interest payments on outstanding debt.