Which of the following is responsible for buying and selling

Which of the following is responsible for buying and selling of govt. Securities to influence reserves in the banking system? A)Twelve Federal Reserve banks. B) The board of Govt. Of the Federal Reserve. C) The Executive branch of Govt. D)The Federal open Market committee.

Solution

2) Ans is D, Federal open market committee

3) Ans is B, It can influence chnages in money supply

4) Ans is A, money market

5) Ans is C, Discount rate

6) Ans is D, All of the above

7) Ans is C, open market operations

8) Ans is D, increases flow of reserves to banking system

9) Ans is B, promise to repay borrowed funds

10) Ans is A, at a discount since the bond price falls with increase in market rate

11) current yield = annual interest payment / current price

= 200/1250

= 0.16

= 16%

Ans is C, 16%