-Refer to Table 10-3

question 100

Multiple Choice

-Refer to Table 10-3. If the Bank of Canada requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does the Bank of Kamloops now hold?

• A) $5
• B) $25
• C) $60
• D) $65

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Definitions:

Option Contract

A contract which grants the holder the right to buy or sell an underlying asset at a predetermined price within a specified time frame.

Hedge Risk

A financial strategy used to limit or offset the probability of loss from fluctuations in the prices of currencies, commodities, or securities.

Speculate

The act of investing or trading in financial assets with high risk in anticipation of significant returns.

American Option

A type of options contract that allows holders to exercise the option at any time up to and including the expiration date.