Risks adverse changes in rates or yields that might

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Financial Markets and Institutions
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Chapter 24 / Exercise 1
Financial Markets and Institutions
Madura
Expert Verified
24. What causes the positions that dealers hold in securities to change over time?
Problems and Issues1.Determine which of the following statements are TRUE and which are FALSE. For those that are FALSE. Identify what makes them false and correct it.a. Government securities dealers rely principally on demand loans from banks for financing their purchase of RPs.
b. Government securities dealers use collateral for the backing of RPs that they do not usually obtain until after they purchase the RP.
c. Government securities brokers often trade government securities with dealers but do not incur interest rate risk in the process.
d. Government securities brokers usually take short positions in government securities when interest rates are expected to be rising, and long positions when interest rates are expected to be falling.
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Financial Markets and Institutions
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Chapter 24 / Exercise 1
Financial Markets and Institutions
Madura
Expert Verified
Chapter 10 - Introduction to the Money Market and the Roles Played by Governments and Security Dealers2.Adam is returning to college in the fall and has $5,000 saved for his tuition, with $2,500 to be paid at the beginning of September and $2,500 to be paid at the beginning of next January. He is considering the purchase of a new 3-month T-bill with $2,500, and upon maturity place the proceeds in an interest-bearing checking account in order to earn some interest income until he needs those funds for his January tuition. This investment strategy exposes Adam to:

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