Question
City Bank has estimated that its average daily net transaction accounts balance over the recent 14-day reserve computation period was $225 million. The average daily
City Bank has estimated that its average daily net transaction accounts balance over the recent 14-day reserve computation period was $225 million. The average daily balance with the Fed over the 14-day maintenance period was $8 million, and the average daily balance of vault cash over the two-week reserve computation period was $5 million.
a. Under the rule effective in 2016, what is the amount of average daily reserves required to be held during the reserve maintenance period for these net transaction accounts balances?
b. What is the average daily balance of reserves held by the bank over the maintenance period? By what amount were the average reserves held higher or lower than the required reserves?
c. If the bank transferred $35 million of its deposits every Friday over the two-week computation period to one of its offshore facilities, what would be the revised average daily reserve requirement?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started