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Q: Discuss the 10-year Bond rate of UK government as proxy of risk-free rate.
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- Which of the following are money market securities?I. Jumbo CDsII. Short-term municipal debtIII. U.S. Treasury billsIV. Commercial paper A. I and IV only B. II and III only C. I, II, and IV only D. II, III, and IV only E. I, II, III, and IVWhich one of the following rate is often taken as the representative of the government borrowing rate a. The 10-year government bond rate b. The reverse repo rate c.The 5-year treasury rate d. The CRRH10. Assume that initially, the risk premium, ρ = 0 and that the domestic and foreign interest rates are given by R = .06, R* = .05. Suppose that the risk premium depends linearly on the difference between domestic government debt, B, and domestic assets of the central bank, A, i.e., ρ = ρ (B-A) Find the new domestic interest rate if a sterilized purchase of foreign assets adjusts A s.t. (a) B - A = -.01/ ρ0 (b) B - A = .03/ ρ0
- 4 Risk free rate represents: Group of answer choices The rate provided by short term government securities Beta The rate provided by long term government securities The market rate of returnWhich one is correct answer please confirm? Q1: If the return on U.S. Treasury bills is 7.02%, the risk premium is 2.32%, and the inflation rate is 4.16%, then the real rate of return is ____. a. 2.86% b. 7.02% c. 4.70% d. 6.48%The nominal interest rate is adjusted based on _______ from the real interest rate. A. government controls B. inflation C. income growth D. exchange rate movements
- Question Consider the following balance sheet positions for a financial institution:• Rate-sensitive assets = $120 million; Rate-sensitive liabilities = $180 million.• Rate-sensitive assets = $230 million; Rate-sensitive liabilities = $200 million.a) Calculate the repricing gap and the impact on net interest income of a 2 percent increase in interest rates for each position. b) Calculate the repricing gap and the impact on net interest income of a 2 percent decrease in interest rates for each position.c) Explain the type of risk this FI is exposed to in each position.Question Consider the following balance sheet positions for a financial institution:• Rate-sensitive assets = $120 million; Rate-sensitive liabilities = $180 million.• Rate-sensitive assets = $230 million; Rate-sensitive liabilities = $200 million.a) Calculate the repricing gap and the impact on net interest income of a 2 percent increase in interest rates for each position. b) Calculate the repricing gap and the impact on net interest income of a 2 percent decrease in interest rates for each position.c) Explain the type of risk this FI is exposed to in each position. Kindly explain in detailDiscuss the 10-year Bond rate of UK government as proxy of risk-free rate.
- Define each following terms: m. Interest rate parity; purchasing power parity n. Eurocredits; eurodollar o. Eurobond; foreign bondThe following data are gathered for: · The real risk-free rate is 1.25% · Inflation premium is constant at 2.50% · Default risk premium is 5% · Liquidity risk premium is 0.50% What is the quoted rate on a short-term government security? (Format: X.XX%)Q2-2 In the portfolio balance approach, which of the following (other things equal) will cause an increase in the demand for domestic bonds by home country citizens? a. a decrease in the home country interest rate b. an increase in the home country price level c. an increase in the home country real income level d. a decrease in the expected rate of appreciation of the foreign currency (or a decrease in the expected rate of depreciation of the home currency)