If Banks Do Not Have Enough Reserves to Satisfy the Reserve

question 139

Multiple Choice

If banks do not have enough reserves to satisfy the reserve requirement,they can

• A)Buy securities.
• B)Pay off discount loans at the Federal Reserve bank.
• C)Lend additional reserves in the federal funds market.
• D)Sell securities.

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Definitions:

Private Offering

A funding method where securities are sold to a small number of selected investors instead of the general public, often to raise capital for a company.

Rule 10b-5

A regulation under the U.S. Securities Exchange Act of 1934 that prohibits fraud, misrepresentation, and insider trading in the securities market.

Conflict of Interest

A situation in which a person or entity has competing interests or loyalties that could potentially influence the objectivity of their decisions.

Securities Broker

A professional intermediary who facilitates the purchase and sale of securities on behalf of clients.