Paying a Higher Interest Rate on Reserves Held at the Fed

question 142

Multiple Choice

Paying a higher interest rate on reserves held at the Fed will tend to:

• A) increase the money supply.
• B) decrease the money supply.
• C) not change the money supply.
• D) have an ambiguous effect on the money supply.

Understand the definitions and applications of spot rates, forward rates, and the calculation of gains or losses on foreign exchange.

Identify the factors necessary to determine the fair value of forward contracts.

Differentiate between fair value hedges, cash flow hedges, and hedges of net investments in foreign operations.

Calculate foreign exchange gain or loss resulting from currency fluctuation.

---

Definitions:

SWOT Analysis

A strategic planning tool used to identify and assess the Strengths, Weaknesses, Opportunities, and Threats related to a project, organization, or business venture.

Starbucks

A multinational chain of coffeehouses and roastery reserves known for its signature coffee drinks, teas, and baked goods.