1.Which of the following is a rate that should theoretically serve as a floor fo

Question

1.Which of the following is a rate that should theoretically serve as a floor for the Fed funds rate?
The discount rate
U.S. dollar Libor
The rate of interest on excess reserves (IOER)

2.If a security dealer "repos securities," they are a
borrower of collateral.
borrower of funds.
lender of funds.

3.A dealer is said to be running a "matched book" if

   if the dealer's total assets equals total liabilities plus equity.
   a 3 month loan to Bank A is funded with a 2-month loan from Bank B.
   if the dealer's assets and liabilities are matched in terms of market value.
   if the dealer's assets and liabilities are matched in terms of maturity.

4.An increase in the supply of reserves in the banking system leads to an increase in the Fed funds rate.
True
False

Explanation / Answer

1) The rate of interest on excess reserves

2) borrowers of collateral.

3) if the dealer's total asset equals total liablilities plus equity

4)True, an increase in the suplly of reserves in the banking system leads to an increase in the Fed funds rate

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