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Presentation ( Group 5 ) - Bloomberg JPMorgan Sees 75%...

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Bloomberg JPMorgan Sees 75% Chance of More Quantitative Easing This Year September 27, 2010, 7:39 AM EDT By Anchalee Worrachate Sept. 27 (Bloomberg) -- JPMorgan Chase & Co. said there’s a 75 percent chance that the Federal Reserve will start another round of asset purchases before the end of this year to boost the economy, supporting Treasury bond prices. The U.S. central bank may spend “a few hundred billion dollars” on a so-called quantitative easing program, and it’s likely to keep the official rate on hold until 2012, said Pavan Wadhwa, head of European interest-rate strategy – in London at JPMorgan. ( Vu Thi Ngoc Yen. ID number : 9924609 ) 1. the Federal Reserve : On December 23, 1913, the Federal Reserve System, which serves as the nation's central bank, was created by an act of Congress . The System consists of a seven member Board of Governors with headquarters in Washington, D.C., and twelve Reserve Banks located in major cities throughout the United States. 2. asset purchases : Transaction situation where a business' assets and certain liabilities are acquired and folded into an existing company or transferred to a new company 3. Boost: increase or raise 4. Treasury bond : Treasury bonds ( T-Bonds , or the long bond ) have the longest maturity, from twenty years to thirty years. They have a coupon payment every six months like T-Notes, and are commonly issued with maturity of thirty years. The secondary market is highly liquid, so the yield on the most recent T-Bond offering was commonly used as a proxy for long-term interest rates in general. [ citation needed ] This role has largely been taken over by the 10-year note 5. The term quantitative easing (QE) describes a monetary policy used by central banks to increase the supply of money by increasing the excess reserves of the banking system. This policy is usually invoked when the normal methods to control the money supply have failed, i.e
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the bank interest rate , discount rate and/or interbank interest rate are either at, or close to, zero . 6. official rate: Official Cash Rate (OCR) is interest rate paid by banks in the overnight money market in Australia and New Zealand . Through the regulated use of Exchange Settlement Accounts, a central bank is able to adjust the interest rates of a nation's economy. The OCR cannot be changed by transactions between financial institutions as this does not change the supply of money, only its location. Only transfers between the central bank and an institution can affect the cash rate. As banks are made to settle all inter-bank transfers overnight, the central bank can regulate the rate paid for cash by the sale or buy back of bonds and other government issued securities (these are known as domestic market operations ). As the sale or purchase of bonds affects the supply of money, then the interest rate will change to reflect its availability. This system indirectly influences the term structure of interest rates in
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This note was uploaded on 05/02/2011 for the course FINANCE 9924603 taught by Professor Ssgdbfb during the Spring '11 term at Kyung Hee.

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Presentation ( Group 5 ) - Bloomberg JPMorgan Sees 75%...

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