QUESTION 1 0.75 points Save Answer Which of the following statements is NOT correct? O A. The RBA aims at offsetting (partially or fully) the effect of the autonomous factors on the ESF stock when deciding the injections at the OMO. O B. The RBA cannot impose the cash rate to banks but can decide the cash rate target. O C. The cash rate is always on the cash rate target because of banks' expectations about the future level of cash rate. O D. The equilibrium cash rate and the cash rate target are two distinct concepts; they may or may not coincide. O E. The RBA manipulates the position of the supply of reserves to hit the cash rate target. QUESTION 2 0.75 points Save Answer Which of the following statements is correct? Consider a given bond yield on a yield curve. A year later, considering the same government bond, O A. the yield of this bond has shifted to the left, towards the y axis, and up. ? B. the yield of this bond has shifted to the left, towards the y axis, but one cannot tell if it went up or down. O C. the yield of this bond has shifted to the right, away from the y axis, and up. O D. the yield of this bond has shifted to the right, away from the y axis, but one cannot tell if it went up or down. O E. the yield of this bond has shifted to the right, away from the y axis, and down.QUESTION 3 0.75 points Save Answer Which of the following statements is correct? In the theoretical market for reserves, the demand for reserves comes from while the supply for reserves is issued by O A. banks; the central bank O B. issuers; investors ? O C. lending banks; borrowing banks O D. the central bank; the banks O E. borrowing banks; lending banksQUESTION 4 0.75 points Save Answer Which of the following equations is compatible with expectations theory of interest rates? [The notation follows the convention used in the course] [If you cannot see the equations below, you may need to set upJava.] 00- .e 3_ . .e .9 (14013) (1+011)(1+lzl)(1+211) O 5' None of the above expressions are compatible with expectations theory. a QUESTION 5 0.75 points Save Answer The demand for a bond increases and the supply for that bond decreases. Which of the following statements is correct? As a result, in equilibrium, the stock of that bond in the financial system while its yield [we rule out vertical or horizontal curves] O A. decreases; decreases O B. increases; may increase or decrease O C. may increase or decrease; decreases O D. may increase or decrease; may increase or decrease O E. may increase or decrease; increases ?QUESTION 6 0.75 points Save Answer Which of the following statements is correct? If investors had reluctance towards locking their money for too long and if ( 1 + i,) 2 had a larger value than (1+ i ) (1+ i ) investors would therefore A. choose a two year investment rather than two successive one year investments. O B. choose the two year investment if the difference in value [ (1+ i,) 2 minus (1+ i ) (1+ i) ] is larger than the liquidity premium they require. C. be indecisive regarding the best option among a two year investment and two successive one year investments. O D. be indifferent between a two year investment and two successive one year investments. O E. choose the two year investment if the difference in value [ ( 1+ i,) 2 minus (1+ i ) (1+ i ) ] is smaller than the liquidity premium they require. QUESTION 7 0.75 points Save Answer ? Which of the following items is NOT part of Tier1 capital? O A. Accumulated past retained profits O B. Cumulative preference shares O C. Capital reserve O D. Non cumulative preference shares O E. Ordinary shares issued