OPEN MARKET OPERATIONS Definition

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OPEN MARKET OPERATIONS is the purchases and sales of gov­ernment and certain other securities in the open market by the New York Federal Reserve Bank as directed by the Federal Reserve in order to influence the volume of money and credit in the economy. Purchases inject reserves into the depository system and foster expansion in money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most impor­tant and most flexible monetary policy tool. They are used to promote higher or lower growth in money and credit, and to offset undesirable changes in the reserve positions of depository institutions stemming from movements in currency, float, Treasury deposits and other factors.

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EARNINGS FROM OPERATIONS (EFO) represent earnings before other operating items less (i) depreciation and amortization plus (ii) other income less (iii) other expense.

FINANCIAL MANAGEMENT is the process of managing financial resources, including management decisions concerning accounting and financial reporting, forecasting, and budgeting.

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