LIBF DipFA AFAI Practice Questions - LIBF DipFA Module 3 - Advanced Financial Advice Investment (AFAI) Exam

What is the immediate direct transmission mechanism of Quantitative Easing (QE) when conducted by the Bank of England?

Direct injection of cash into consumer retail bank accounts Central bank purchase of UK Gilts from institutional investors, driving yield up and price down Central bank creation of central bank reserves to buy Gilts, raising bond prices and lowering yields Reduction of corporate tax rates to stimulate equity valuation multiples

Correct Answer:

Central bank creation of central bank reserves to buy Gilts, raising bond prices and lowering yields

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