2. The average daily net transaction accounts deposit balance of a local bank during the most recent reserve computation period is $400 million. The amount of average daily reserves at the Fed during the reserve maintenance period is $20 million, and the average daily vault cash corresponding to the maintenance period is $6.313 million.

a. What is the average daily reserve balance required to be held by the bank during the maintenance period using the 2015 rules ?

b. Is the bank in compliance with the reserve requirements? Explain why or why not.

c. If the DI is allowed to make up to 4% without penalty for undershooting on the gross required reserves; a 1.5% penalty for exceeding the allowable limit (4%) and a 2% markup, compute the total charge that can be imposed on the DI?

2.(a) Discuss the rationale behind risk-based capital requirements.

(b) Discuss the major weaknesses behind risk-based capital standards?