Managers at the Bank of Quebec are afraid that the bank will not have enough reserves at the end of the business day to meet withdrawals tomorrow. It currently has two options to borrow money overnight. First, it could borrow money from the Bank of Canada (BOC) at a rate of 0.75%. Second, it could borrow money from other banks at a rate of 0.25%. 1. What is the overnight rate?
2. What is the bank rate?
3. What would happen to other short-term interest rates if the Bank of Canada increases its overnight rate target?
A. They should remain unchanged.
B. They would become irrelevant.
C. They would decrease.

Bank of Quebec

1. The overnight rate is 0.25%

2. The bank rate is 0.75%

3. If the Bank of Canada increases its overnight rate target, the other short-term interest rates:

B. They would become irrelevant.

Explanation:

a) Data and Calculations;

Bank of Canada (BOC) rate = 0.75%

Other banks' rate = 0.25%

b) The overnight rate is the interest rate at which a Canadian depository bank lends or borrows funds with other depository institutions in the Canadian overnight market.  The central bank rate is the interest rate that the Bank of Canada charges other Canadian banks to borrow funds from it.

c

explanation:

well obviously you must be dumb if you dont noe dat