Formal_MT - Analyze very briefly 1 Suppose the CFO of a...

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Analyze very briefly. 1) Suppose the CFO of a German corporation with surplus cash flow has 1 million Euros to invest. Suppose that interest rates on 1-year CD deposits in US banks are 2%, while rates on 1year CD deposits denominated in euros in German banks are currently 4.5%. Suppose further that the CFO expects that the (euro/$) exchange rate will increase from 1euro per $ to 1.1 euros per $ during the coming year. Should the CFO invest in CD's denominated in dollars or in euros? Show your work to substantiate your response as credible!2) Explain why the Fed must normally add reserves to the banking system via open market operations on most days in order to maintain its interest rate target in the Fed Funds market. You refer to its current reduction in the federal fund rate cut to 0.25% that you have seen in recent months.3) Visit the home page of the Federal Reserve Systems of the central bank of US at and read the key objectives of the Fed to stabilize the macroeconomic crises of the US economy (you have to look for the links from the home page of the Fed’s websiste- click on the tab “About the Fed” and read through the contents). Based on the information on monetary policy objectives and tools, answer the following question 3A.For: Policy objectives/purpose: The specific url under the tab about the Fed (Item2):

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