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The Hall State Bank has the following assets: Reserves of $50 million; Loans of $470 million; and Securities of $125 million. Hall States liabilities include
The Hall State Bank has the following assets: Reserves of $50 million; Loans of $470 million; and Securities of $125 million. Hall States liabilities include Deposits of $500 million; Borrowed funds of $65 million and Bank Capital of $80 million. If the required reserve rate is 10 percent, answer the following: What is the amount of excess reserves the bank is currently holding? What are the options available to the bank if customers decide to withdraw $30 million in deposits? Explain.
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