Favored the use of repurchase agreements

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The Federal Reserve has increasingly favored the use of Repurchase Agreements as part of its open market operations. Briefly describe these and why the Fed or banks prefer to use them.

Banks engage in proprietary trading as part of their operations. Briefly speculate on why they now must adhere to much more stringent trading activity as a result of the 2008-09 financial crises.

Assume that Canada suddenly experiences high inflation. How might this affect the value of the Canadian dollar according to the purchasing power parity (PPP) theory?

Australia's central bank decides to increase the value of the Australian dollar against the Japanese yen. How might it use direct intervention to accomplish this?

Assume the following information: i. Mexican one-year interest rate = 15% ii. U.S. one-year interest rate = 11% iii. If interest rate parity exists, what would be the forward premium or discount on the Mexican peso's forward rate? Would covered interest arbitrage be more profitable to U.S. investors than investing at home? Explain.

Reference no: EM131597162

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