Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A bank currently has $150 million in hot money deposits against which it wants to hold an 80 percent reserve and $90 million in vulnerable

A bank currently has $150 million in "hot money" deposits against which it wants to hold an 80 percent reserve and $90 million in vulnerable deposits against which it wants to hold a 30 percent reserve. It also has $45 million in stable deposits against which it wants to hold a 5 percent reserve. Legal reserves for the bank are 5 percent of all deposits. What is the bank's liability liquidity reserve?

A.

$149.25 million

B.

$285 million

C.

$141.7875 million

D.

$216.60 million

E.

None of the options is correct

I want to know why is the answer C how to solve it?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management

Authors: Rob Quail, Ricardo J. Rodriguez

2nd Edition

1557868441, 9781557868442

More Books

Students also viewed these Finance questions