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finance The Federal Reserve wants to conduct a matched sale purchase transaction for $10 million dollars to be reversed in 15 days. Show the effect
finance
The Federal Reserve wants to conduct a matched sale purchase transaction for $10 million dollars to be reversed in 15 days. Show the effect of this initial operation and the reverse operation on FED balance sheet on Banking Balance sheet using T-accounts. (Hint: There should be 4 t- accounts). Suppose a bank pays back the FED a discount loan worth $500,000. Use T-accounts to show the effect of the transactions on the bank and Fed's balance sheet. 2. Suppose there are many types of used cameras each type with differing level of quality and each type is equally likely to be sold in the marketplace. Only sellers know the true quality of cameras. Best quality should bring $10,000, and worst quality should bring $1000 in price. If buyers cannot distinguish between good cameras and bad cameras, explain how bad cameras will drive out the good ones. What will happen to the average quality and price of the cameras that are sold in the marketplace? 3. Investigate and search for "fire sale externalities. Explain how this affects financial institutions in a financial crisis and potential solutions to the problem. 4. The Federal Reserve wants to conduct a matched sale purchase transaction for $10 million dollars to be reversed in 15 days. Show the effect of this initial operation and the reverse operation on FED balance sheet on Banking Balance sheet using T-accounts. (Hint: There should be 4 t- accounts). 5. Suppose a bank pays back the FED a discount loan worth $500,000. Use T-accounts to show the effect of the transactions on the bank and Fed's balance sheet. The Federal Reserve wants to conduct a matched sale purchase transaction for $10 million dollars to be reversed in 15 days. Show the effect of this initial operation and the reverse operation on FED balance sheet on Banking Balance sheet using T-accounts. (Hint: There should be 4 t- accounts). Suppose a bank pays back the FED a discount loan worth $500,000. Use T-accounts to show the effect of the transactions on the bank and Fed's balance sheet. 2. Suppose there are many types of used cameras each type with differing level of quality and each type is equally likely to be sold in the marketplace. Only sellers know the true quality of cameras. Best quality should bring $10,000, and worst quality should bring $1000 in price. If buyers cannot distinguish between good cameras and bad cameras, explain how bad cameras will drive out the good ones. What will happen to the average quality and price of the cameras that are sold in the marketplace? 3. Investigate and search for "fire sale externalities. Explain how this affects financial institutions in a financial crisis and potential solutions to the problem. 4. The Federal Reserve wants to conduct a matched sale purchase transaction for $10 million dollars to be reversed in 15 days. Show the effect of this initial operation and the reverse operation on FED balance sheet on Banking Balance sheet using T-accounts. (Hint: There should be 4 t- accounts). 5. Suppose a bank pays back the FED a discount loan worth $500,000. Use T-accounts to show the effect of the transactions on the bank and Fed's balance sheet Step by Step Solution
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