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:

Related Book For book-img-for-question

Introduction to Finance Markets Investments and Financial Management

ISBN: 978-1118492673

15th edition

Authors: Melicher Ronald, Norton Edgar

See More Books

Question Posted: Mar 27, 2015 12:03 PM

See More 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...
Total Sales in January 20x! $200,000 $260,000 $320,000 Cash receipts in January 20x1 From December sales on account............0.... $ $ $ CMM AETV ETA GEIS GENES caedenoocansosetsoucder annseitny...
How are distributions from S corporations compared to dividends from C corporations?
Equipment acquired on January 6, 2013, at a cost of $425,000, has an estimated useful life of 16 years and an estimated residual value of $65,000 a. What was the annual amount of depreciation for the...
what order do these go in income statement, balance sheet, closing journal entries, adjusted trial balance, retained earnings, closing trial balance
A firm sells a product in a market where there are two types of consumers, high and low-valuation consumers. There are equally many of the two types of consumers, and the total number of consumers is...
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....
The following data (in thousands) were taken from recent financial statements of Starbucks Corporation: a. Compute the working capital and the current ratio as of September 30, 2007 and October 1,...
Revenue and cash receipts journals; accounts receivable subsidiary and general ledgers Transactions related to revenue and cash receipts completed by Crowne Business Services Co. during the period...
Panguitch Company had sales for the year of $100,000. Expenses (except for income taxes) for the year totaled $80,000. Of this $80,000 in expenses, $10,000 is bad debt expense. The tax rules...
Assume that the composition of federal outlays and receipts shown in the figure remained the same in 2019. In the figure, the categories "Defense and homeland security" and "Non-defense...
1) A car's age is a _ variable. Quantitative O Categorical 2) A car's maker is a variable O Quantitative Categorical 3) A house's square footage is a _________variable O Quantitative O Categorical 4)...
The following table shows the distribution of clients by age limits. Use the grouped data formulas to calculate the variance and standard deviation of the ages. Rango de edad Cantidad de clientes...
Identify and discuss the key environmental influences from the model (see Figure 5.14) that have significance for job design. Political Legal Environmental Internal environment Strategy Economic Job...
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?
explain the concept of Time Value of Money and provide and example. In addition to your discussion, please explain the differences between Stocks and Bonds
Wildhorse Inc. has just paid a dividend of $3.80. An analyst forecasts annual dividend growth of 9 percent for the next five years; then dividends will decrease by 1 percent per year in perpetuity....
Jenny wanted to donate to her alma mater to set up a fund for student scholarships. If she would like to fund an annual scholarship in the amount of $6,000 and her donation can earn 5% interest per...

A new bank has vault cash of $1 million and $5 million in deposits held at its

Question:

Step by Step Answer:

a Bank reserves 6 millio...View the full answer

Introduction to Finance Markets Investments and Financial Management

Students also viewed these Banking questions