5. A bank borrows $100,000 from the Fed, leaving a $100,000 Treasury bond on deposit with the...
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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.
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