1. If market interest rates move upwards after an investor buys a government bond, the investor may:

1) sell the bond back to Treasury

2) sell the bond in the secondary markets for a capital loss

3) sell the bond in the secondary markets for a capital gain

4) hold the bond until the market rates return to their original level and then have a capital gain

2. The Reserve Bank conducts market operations in order to affect its monetary policy objectives. Which of the following best describes the Reserve Bank's market operations?

1) Market operations may be conducted to neutralise official FX transactions.

2) Reserve Bank market operations target the overnight cash rate.

3) Market operations affect day-to-day system liquidity.

4) All of the given answers.