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If LVTS participating financial institutions have insufficient settlement balances ____.
A) they can borrow from each other in the pre-settlement trading period at the bank rate
B) they can borrow from each other in the pre-settlement trading period at the overnight rate
C) they can borrow from the Bank of Canada
D) Only B and C of the above.
Answer: D
Diff: 3 Type: MC Page Ref: 408
Skill: Applied
Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
Canada
If LVTS participating financial institutions have insufficient settlement balances ____.
A) they can borrow from each other in the pre-settlement trading period
B) they can borrow from the Bank of Canada
C) they can borrow from the Bank of Canada at the prime rate
D) Only A and B of the above.
Answer: D
Diff: 3 Type: MC Page Ref: 408
Skill: Applied
Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
Canada
LVTS participants with positive settlement balances at the end of the day ____.
A) are paid the bank rate
B) are paid the overnight rate
C) are paid the bank rate less 50 basis points
D) are paid the prime rate
Answer: C
Diff: 3 Type: MC Page Ref: 408
Skill: Applied
Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
Canada
The rate spread at the Bank of Canada for LVTS balances is ____.
A) 300 basis points
B) 200 basis points
C) 50 basis points
D) 25 basis points
Answer: C
Diff: 1 Type: MC Page Ref: 408
Skill: Applied
Objective List: 17.1 Characterize the framework for the implementation of monetary policy in
Canada