The average daily net transaction accounts deposit balance of CCNB bank during the most recent reserve computation period is $$650$ million. The amount of average daily reserves at the Fed during the reserve maintenance period is $$50$ million and the average daily vault cash corresponding to the maintenance period is $$10$ million. Assume the minimum cash reserve requirement against the net transaction accounts are:

Net transaction accounts $($million$)$

Reserve requirement $(\%)$

$<$ $$32$

$0$

$32-250$

$3$

$>250$

$10$

If overshooting, a maximum of $4$ percent of the gross required reserves can be carried over to the next maintenance period. If undershooting by more than $4\%,$ a penalty equal to the central bank$$s discount rate plus $2\%$ is applied.

Required:

a$.$ What is the average daily reserve balance required to be held by the bank during the maintenance period? $(3$ marks$)$

b$.$ Is the bank in compliance with the reserve requirements and how much fund can be carried over to next period or penalized? $(3$ marks$)$

c$.$ If the bank has an opportunity cost of $7$ percent and deposits at the Central Bank pay $3$ percent, what is the effect on the income statement from this reserve period? $(3$ marks$)$

d$.$ If the bank had transferred $$40$ 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? $(3$ marks$)$