Question
he reserve requirement is 5% on the first $ 50 million of deposit accounts and 10% on the excess of these. (millions of dollars) Assets:
he reserve requirement is 5% on the first $ 50 million of deposit accounts and 10% on the excess of these.
("millions of dollars") Assets: Liabilities and Capital: Reserves $ 15.9 Deposits $ 180.0 Loans 150.0 Capital 20.0 Investments 34.1 Total $ 200.0 Total $ 200.0
A. Suppose the bank sells $ 5 million in Investments to improve its liquidity. Show the situation status after this transaction. Indicate the excess of the bank's reserves.
B. Suppose the bank makes commercial loans to various clients for $ 10.4 million. Show the situation status after this transaction. Analyze the reserve account and explain what considerations the bank treasurer should have.
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