Why is the federal funds market more active on Wednesday?

1. As it is the middle of the settlement period for required reserves, depository institutions use the market to raise funds and gain more profit before adjusting their required reserve position on the last day of the settlement period.
2. As it is the first day of the settlement period for required reserves, depository institutions use the market to raise or reduce their required reserve position depending on the market conditions.
3. As it is the final day of the settlement period for required reserves, depository institutions use the market to adjust their required reserve position on that day.

a) 1

b) 2

c) 3