9. The following net transaction accounts and cash reserves at the Fed have been documented by a bank for computation of its reserve requirements (in millions) under lagged reserve accounting. Monday 10th Tuesday 11th Wednesday 12th Thursday 13th Friday 14th April $200 Net transaction accounts Reserves at Fed $300 22 $250 21 $280 18 $260 27 20 Monday 17th Tuesday 18th Wednesday 19th Thursday 20th Friday 21st Net transaction accounts Reserves at Fed $280 20 $300 35 $270 21 $260 18 $250 28 Monday 24th Tuesday 25th Wednesday 26th Thursday 27th Friday 28th Net transaction accounts Reserves at Fed $240 19 $230 19 $250 21 $260 19 $270 24 Monday 1st Tuesday 2nd Wednesday 3rd Thursday 4th Friday 5th May Net transaction accounts Reserves at Fed $200 20 $300 22 $250 21 $280 18 $260 27 Monday 1st Tuesday 2nd Wednesday 3rd Thursday 4th Friday 5th May Net transaction accounts Reserves at Fed $200 20 $300 22 $250 21 $280 18 $260 27 Monday 8th Tuesday 9th Wednesday 10th Thursday 11th Friday 12th $260 Net transaction accounts Reserves at Fed $280 20 $300 35 $270 21 $250 27 18 Monday 15th Tuesday 16th Wednesday 17th Thursday 18th Friday 19th Net transaction accounts Reserves at Fed $240 20 $230 35 $250 21 $260 18 $270 28 Monday 22nd Tuesday 23rd Wednesday 24th Thursday 25th Friday 26th Net transaction accounts Reserves at Fed $200 19 $300 19 $250 21 $280 19 $260 24 The average vault cash for the computation period has been estimated to be $1 million per day. a. What level of average daily reserves is required to be held by the bank during the maintenance period, May 11-24? b. Is the bank in compliance with the requirements? c. What amount of required reserves can be carried over to the following com- putation period? d. If the average cost of funds to the bank is 8 percent per year and deposits at the Fed pay 0.2 percent, what is the effect on the income statement for this bank for this reserve period? 9. The following net transaction accounts and cash reserves at the Fed have been documented by a bank for computation of its reserve requirements (in millions) under lagged reserve accounting. Monday 10th Tuesday 11th Wednesday 12th Thursday 13th Friday 14th April $200 Net transaction accounts Reserves at Fed $300 22 $250 21 $280 18 $260 27 20 Monday 17th Tuesday 18th Wednesday 19th Thursday 20th Friday 21st Net transaction accounts Reserves at Fed $280 20 $300 35 $270 21 $260 18 $250 28 Monday 24th Tuesday 25th Wednesday 26th Thursday 27th Friday 28th Net transaction accounts Reserves at Fed $240 19 $230 19 $250 21 $260 19 $270 24 Monday 1st Tuesday 2nd Wednesday 3rd Thursday 4th Friday 5th May Net transaction accounts Reserves at Fed $200 20 $300 22 $250 21 $280 18 $260 27 Monday 1st Tuesday 2nd Wednesday 3rd Thursday 4th Friday 5th May Net transaction accounts Reserves at Fed $200 20 $300 22 $250 21 $280 18 $260 27 Monday 8th Tuesday 9th Wednesday 10th Thursday 11th Friday 12th $260 Net transaction accounts Reserves at Fed $280 20 $300 35 $270 21 $250 27 18 Monday 15th Tuesday 16th Wednesday 17th Thursday 18th Friday 19th Net transaction accounts Reserves at Fed $240 20 $230 35 $250 21 $260 18 $270 28 Monday 22nd Tuesday 23rd Wednesday 24th Thursday 25th Friday 26th Net transaction accounts Reserves at Fed $200 19 $300 19 $250 21 $280 19 $260 24 The average vault cash for the computation period has been estimated to be $1 million per day. a. What level of average daily reserves is required to be held by the bank during the maintenance period, May 11-24? b. Is the bank in compliance with the requirements? c. What amount of required reserves can be carried over to the following com- putation period? d. If the average cost of funds to the bank is 8 percent per year and deposits at the Fed pay 0.2 percent, what is the effect on the income statement for this bank for this reserve period
