The Reserve Bank of Australia's (RBA) monetary policy can reduce an FI's interest rate risk:
A)by smoothing or targeting the level of interest rates it increases unexpected interest rate shocks and interest volatility.
B)by smoothing or targeting the level of interest rates it decreases unexpected interest rate shocks and interest volatility.
C)by letting interest rates find their own level it increases interest volatility.
D)All of the listed options are correct.

Question

Quizplus · Accepted Answer

The RBA's monetary policy of smoothing or targeting the level of interest rates can reduce an FI's interest rate risk by decreasing unexpected interest rate shocks and interest volatility.

The Reserve Bank of Australia's (RBA) Monetary Policy Can Reduce