AAFM Exam GLO_CWM_LVL_1 Topic 8 Question 58 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam

Question #: 58
Topic #: 8

[All GLO_CWM_LVL_1 Questions]

Which of the following is true of Reverse Repo rate?

ADetermined by free market forces

BLower than repo rate

Cbenchmark for long term rates

DPart of funding cost for commercial banks

Show Suggested Answer

Suggested Answer: B

by Felix at Mar 02, 2023, 11:08 PM

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Jolanda

2 months ago

Aha! The reverse repo rate is the benchmark for long-term rates. That means it's the foundation upon which other interest rates are built. It's like the financial version of the chicken and the egg - which came first, the repo or the reverse repo?

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Jerry

20 days ago

That's right, it's like the backbone of the financial system.

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Marti

22 days ago

It's interesting how it plays a crucial role in determining other interest rates.

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Ettie

27 days ago

Yes, the reverse repo rate is indeed the benchmark for long-term rates.

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Socorro

2 months ago

Okay, let's see... The reverse repo rate is lower than the repo rate, right? So it must be the rate the central bank pays to borrow money from the banks. That's a bit like a bank paying you to borrow your money - I'm starting to get dizzy just thinking about it!

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Lai

1 months ago

It's like a role reversal, with the central bank paying interest to the banks instead of the other way around.

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Ronny

1 months ago

That's right! It's the rate at which the central bank borrows money from commercial banks.

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Sue

2 months ago

Yes, you're correct! The reverse repo rate is indeed lower than the repo rate.

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Sharen

2 months ago

Hmm, let me think... Is it the rate banks pay to borrow from the central bank? Or is it the rate they get when they lend to the central bank? I feel like I'm about to get caught in a financial loop.

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Felicitas

4 days ago

A) Determined by free market forces

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Patria

19 days ago

D) Part of funding cost for commercial banks

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Lizbeth

23 days ago

C) benchmark for long term rates

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Royal

1 months ago

B) Lower than repo rate

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Merri

1 months ago

A) Determined by free market forces

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Maryln

2 months ago

Reverse Repo rate, huh? I bet it's just the repo rate in reverse - like a secret handshake between the banks and the central bank. The real question is, can I use it to reverse my financial troubles?

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