Suppose You Are a Money Market Dealer and Decided to Increase

question 34

Essay

Suppose you are a money market dealer and decided to increase your holdings of securities the day before the Reserve Bank Board met to consider the cash rate (to profit from the cash rate change you expect).Suppose further that the Board decided to leave the rate unchanged.Explain the trading strategy you would have followed to increase your inventory prior to and following the announcement.

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Definitions:

Sensory

Relating to sensation or the physical senses; transmission and perception of sensory information.

Neurological

Pertaining to the nervous system and its diseases or disorders.

Cooing

The early vocalization of babies that involves the production of soft, melodious sounds, typically occurring between 2 to 4 months of age.

Cognitive Development

The construction of thought processes, including remembering, problem-solving, and decision-making, from childhood through adolescence to adulthood.