Problem 4-3 (LG 4-3) Bank Three currently has $800 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve quirement at 10 percent of transaction deposits a. If the Federal Reserve decreases the reserve requirement to 8 percent, show the balance sheet of Bank Three and the Federal Reserve System just before and after the full effect of the reserve requirement change Assume Bank Three withdraws all excess reserves and gives out loans and that borrowers eventually return all of these funds to Bank Three in the form of transaction deposits b. Redo part (o) using a 16 percent reserve requirement Help SAVO & ERI A common performance constraint that prevents hedge fund managers from manipulating returns to generate extra incentive fees is a green shoe provision Historical performance suggests that managers that charge a load most often have better performance. 10:27.50 A fund that requires the investor to pay an additional sales charge to Invest in a fund is said to be a pure fund A leveraged ETF or ETN uses derivatives to magnify the return on an underlying Index A leveraged ETF or ETN uses cash to magnify the return on an underlying Index.