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      Question

      The MSF rate is pegged _____ basis points or a

      percentage point above the repo rate?
      A 45 Correct Answer Incorrect Answer
      B 50 Correct Answer Incorrect Answer
      C 75 Correct Answer Incorrect Answer
      D 90 Correct Answer Incorrect Answer
      E 100 Correct Answer Incorrect Answer

      Solution

      Banks borrow from the central bank by pledging government securities at a rate higher than the repo rate under liquidity adjustment facility or LAF in short. The MSF rate is pegged 100 basis points or a percentage point above the repo rate.

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