Table 9-3 Balance Sheet of the Alpha-Beta Bank

question 198

Multiple Choice

Table 9-3
Balance Sheet of the Alpha-Beta Bank
(All figures in $ million)

-Refer to Table 9-3. If the required reserve ratio is 10% and the market interest rate is 6%, then the opportunity cost of holding excess reserves is

• A) zero since Alpha-Beta does not hold any excess reserves.
• B) $0.9 million.
• C) $2.4 million.
• D) $4 million.

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