A new bank has vault cash of $1 million and $5 million in deposits held at its
Question:
A new bank has vault cash of $1 million and $5 million in deposits held at its Federal Reserve District Bank.
a. If the required reserves ratio is 8 percent, what dollar amount of deposits can the bank have?
b. If the bank holds $65 million in deposits and currently holds bank reserves such that excess reserves are zero, what required reserves ratio is implied?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 81% (11 reviews)
a Bank reserves 6 millio...View the full answer
Answered By
Diksha Bhasin
I have been taking online teaching classes from past 5 years, i.e.2013-2019 for students from classes 1st-10th. I also take online and home tuitions for classes 11th and 12th for subjects – Business Studies and Economics from past 3 years, i.e. from 2016-2019. I am eligible for tutoring Commerce graduates and post graduates. I am a responsible for staying in contact with my students and maintaining a high passing rate.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Introduction to Finance Markets Investments and Financial Management
ISBN: 978-1118492673
15th edition
Authors: Melicher Ronald, Norton Edgar
Question Posted:
Students also viewed these Banking questions
-
The required reserve ratio is 9 percent, required reserves are $10 million, and (total) reserves are $50 million. How much do excess reserves equal? How much do checkable deposits equal?
-
If the bank you own has no excess reserves and a sound customer comes in asking for a loan, should you automatically turn the customer down, explaining that you dont have any excess reserves to lend...
-
A bank currently holds $150,000 in excess reserves. If the current reserve requirement is 12.5%, how much could the money supply change? How could this happen?
-
Following procedures similar to those for the homogeneous problem (see Section 8.4.1), develop the following stress field for a pressurized hole in an infinite nonhomogeneous medium with moduli...
-
With only a part-time job and the need for a professional wardrobe, Rachel quickly maxed out her credit card the summer after graduation. With her first full-time paycheck in August, she vowed to pay...
-
An auditor who is testing IT controls in a payroll system would most likely use test data (discussed in Advanced Module 1 in Chapter 6) that contain conditions such as a. Deductions not authorized by...
-
Which of the following characteristics exhibit Suitable criteria under the assurance engagement? (a) Relevance; (b) Completeness; (c) Reliability; (d) Neutrality (e) Understandability (f) All of the...
-
(Issuance and Exercise of Stock Options) On November 1, 2009, Olympic Company adopted a stock-option plan that granted options to key executives to purchase 40,000 shares of the companys $10 par...
-
Joe's Appliances Ltd. (JAL) will be exporting 380 million Yen worth of goods in four months. In order to make the sale, JAL agreed to be paid in Japanese Yen in four months' time. The following...
-
As the auditor of Clearwater County you learn that various assets are subject to spending constraints. Indicate how each of the following constraints would affect the countys reported fund balance...
-
The prime rate, and other interest rates, offered by banks often change in the same direction as a change in the Feds target for the federal funds rate. As an employee of a Federal Reserve District...
-
A bank has $110 million in deposits and holds $10 million in vault cash. a. If the required reserves ratio is 10 percent, what dollar amount of reserves must be held at the Federal Reserve Bank? b....
-
A jetliner is flying at 275 m/s at a high altitude where the atmospheric pressure and temperature are 50 kPa and 250 K, respectively. Air is first decelerated in a diffuser, before it is compressed...
-
Describe the nature of the revenue cycle and identify the three classes of transactions that are part of this cycle.
-
How may test data and generalized audit software be used in testing EDP application controls over sales transactions?
-
Indicate the specific accounting control objectives for each function in the execution of manufacturing transactions.
-
Why does the form of an occurrence affect the auditor's interpretation of sample results?
-
(a) The structures of cis- and trans-N 2 F 2 were shown in worked example 3.1. Give an appropriate hybridization scheme for the N atoms in each isomer. (b) What hybridization scheme is appropriate...
-
When amino acids are catabolized, what are the end products of the carbon skeletons for glucogenic amino acids? For ketogenic amino acids?
-
Vince, Inc. has developed and patented a new laser disc reading device that will be marketed internationally. Which of the following factors should Vince consider in pricing the device? I. Quality of...
-
A gray gas with an absorption coefficient of \(\kappa\) is contained between two plates separated by a distance \(L\). Using the diffusion approximation for radiation, derive the relation...
-
You decide to start a business selling covers for smart phones in a mall kiosk. To buy inventory, you need to borrow some funds. Why are you more likely to take out a bank loan than to issue bonds?
-
Splitland is a developing economy with two distinct regions. The northern region has great investment opportunities, but the people who live there need to consume all of their income to survive....
-
What risks might financial institutions face by funding long-run loans such as mortgages to borrowers (often at fixed interest rates) with short-term deposits from savers?
-
Tyler believes that some laws passed by his state's legislature are bad, and he refuses to comply with them. He believes a universal law above all others that grants rights to all people and that it...
-
Organizational commitment increases the likelihood that an individual will respond to a negative work event with loyalty or neglect. voice or exit. loyalty or voice. O exit or loyalty.
-
In the context of decision-making, satisficing refers to Selecting options at random without any thought O Always choosing the first available option O Avoiding decisions to reduce cognitive load...
Study smarter with the SolutionInn App