Assume That a Single Chartered Bank Has No Excess Reserves

question 87

Multiple Choice

Assume that a single chartered bank has no excess reserves and that the desired reserve ratio is 20 percent.If this bank sells a bond for $1,000 to the Bank of Canada, it can expand its loans by a maximum of:

• A)$1000
• B)$2000
• C)$200
• D)$800

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Definitions:

Balanced Scorecard

A planning and management framework that ensures business operations are in line with the organization's vision and strategy, enhances communication internally and externally, and tracks the organization's progress towards strategic objectives.

Liquidity Measures

Financial metrics used to determine an entity's ability to pay off its short-term obligations with available assets without significant loss.

Short-Term Obligations

Financial liabilities or debts that are due to be paid within a short period, typically within a year.

Financial Ratios

Quantitative measures derived from a company's financial statements used to assess its financial health, performance, and stability.