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MAF202 WEEK 5 Questions with 100% Actual correct answers | verified | latest update | Graded A+ | Already Passed | Complete Solution $7.99   Add to cart

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MAF202 WEEK 5 Questions with 100% Actual correct answers | verified | latest update | Graded A+ | Already Passed | Complete Solution

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MAF202 WEEK 5 Questions with 100% Actual correct answers | verified | latest update | Graded A+ | Already Passed | Complete Solution

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  • June 19, 2024
  • 9
  • 2023/2024
  • Exam (elaborations)
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MAF202 WEEK 5

1982- present tender system (T-bonds) - correct answer-✓ bids submitted thru
AFOM

✓ min $1 mil - thereafter multiples of $ 1 mil

✓ bids made in terms of yield to maturity up to 3 decimal places - not in terms of
price

✓ bids accepted in ascending order of yield, i.e., lowest-yield bid (highest price) first,
until issue fully subscribed

✓ settlement is via Austraclear




crowding-out effect - correct answer-• govt demand for debt financing reduces amts
of funds available for investment in private sector

(A rise in interest rates and a resulting decrease in planned investment caused by
the federal government's increased borrowing to finance budget deficits and
refinance debt.)

• minimized in times of strong fiscal management i.e. budget surplus




Exchange Settlement Accounts - correct answer-• A special a/c held with the RBA to
facilitate the settlement of value transactions within the payment system.

✓ held by banks, special service providers (building societies and credit unions) and
other providers of payments services.

• exchange settlement a/c transactions use same-day fund, i.e. funds not requiring
clearing through the payments system.

, fiscal policy - correct answer-- it related to the annual incomes and expenditures of a
govt.

- Government policy that attempts to manage the economy by controlling taxing and
spending.




individuals and institutions may participate in the secondary market for the following
reasons: - correct answer- ✔️ funding reqs
✔️ liquidity needs
✔️ reserve reqs
✔️ interest rate expectations
✔️ to maintain the maturity profile of a bond portfolio

instruments issued by the Govt - correct answer-Treasury bonds - mainly bought by
commercial banks, other financial institutions and portfolio managers.




issues of security by govt - correct answer-• long-dated bonds are now issued every
2 yrs, ensuring sufficient securities to support 10-yr bond futures contracts

• govt intends to issue about $5 billion of T-bonds each yr to ensure a deep and
liquid market




main features of T-bonds - correct answer-• coupon instrument (fixed coupons
normally paid each each 6 months/ semi-annual)

• coupon payment = coupon rate ✖️ face value of bond
• face value of bond redeemed at maturity date or may be sold in secondary market
for early redemption.

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