Finance Homework 23

Question Description

ALL WORK MUST BE ORIGINAL. NO PLAGIARISM AS WORK WILL BE THOROUGHLY CHECKED THROUGH TURNITIN PLAGIARISM CHECKER THOROUGHLY FOR ORIGINALITY.

  • Write a 1 page review on the following article:

Keister, T., & McAndrews, J. J. (2009). Why are banks holding so many excess reserves? Federal Reserve Bank of New York Current Issues in Economics and Finance, 15(8), 1–10. Retrieved from http://www.newyorkfed.org/research/current_issues/ci15-8.html

In your own words, explain the key points that the author was trying to communicate. Your review should be at least 1 page not counting the title or reference pages.

On reference page answer these 2 questions and show all steps made to derive to answer. Must show your work.

  • Nominal Rate of Interest Suppose the real interest rate is 6 percent and the expected inflation rate is 2 percent. What would you expect the nominal rate of interest to be?
  • Real Interest Rate Suppose that Treasury bills are currently paying 9 percent and the expected inflation rate is 3 percent. What is the real interest rate?
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