5. A bank borrows $100,000 from the Fed, leaving a $100,000 Treasury bond on deposit with the Fed to serve as collateral for the loan. The discount rate that applies to the loan is 4 percent and the Fed is currently mandating a reserve ratio of 10 percent.

How much of the $100,000 borrowed by the bank must it keep as required reserves? LO36.3

a. $0.

b. $4,000.

c. $10,000.

d. $100,000.