What would you estimate the eurodollar deposit rate

Assignment Help Macroeconomics

Reference no: EM131917691

Problem

1. What would you estimate the eurodollar deposit rate to be if the domestic U.S. dollar deposit rate is 6½ percent, the reserve requirement on time deposits is 2 percent, and the combined cost of taxes and deposit insurance amounts to 10 basis points (1 @10 percent)?

2. Explain in terms understandable to a non-economist why, for example, when interest rates rise sharply, the subsequent headline in the newspaper may say "Bond Prices Plunge in Active Trading."

Reference no: EM131917691

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