Time Span 2006-2016 A. Analyze the two interest rates and explain how they have

Question

Time Span 2006-2016
A. Analyze the two interest rates and explain how they have changed over your chosen time period citing specific examples.

B. Casual Relationship. Briefly hypothesize the casual relationship between the two interest rates.

first graph is for EFFECTIVE FEDERAL FUNDS RATE

Horizonal is Percent (0,1,2,3,4,5,6)

Vertical is Jan 06, Jan 07, Jan 08, Jan 09, Jan 10, Jan 11, Jan 12, Jan 13, Jan 14, Jan 15, Jan 16

2ND GRAPH IS FOR BANK PRIME LOAN RATE

Horizonal is Percent (3,4,5,6,7,8,9)

Vertical is Jan 06, Jan 07, Jan 08, Jan 09, Jan 10, Jan 11, Jan 12, Jan 13, Jan 14, Jan 15, Jan 16

Can't get the images any more clear but i provided what is on the horizonal and what is on the vertical on both graphs, and the graph line is very visible.

Thank you

Explanation / Answer

(a) The two rates have an identical trend ove time. The Effective federal fund rate is the lending rate at which bank lend its reserves to other intermediaries. The Bank prime lending rate is the rate at which the Fed lends to the banks overnight. The bank prime lending arte is roughly two percentages above the effective federal fund rate. While the two rates show an increasing trend between Jan 2006 and Jan 2007 sor some time became constant towards the end of the year 2006 and then decreased thereafter until Jan 2009 and then became constant.

(b) The two curves have a causal relationship. The Bank Prime lending rate depends on the Fund rate. The two curves move in accordance with each other. The Prime lending arte is determined by the effective fund rate.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.