A Bank Has $100,000 in Checkable Deposits and $30,000 in Reserves

question 72

Multiple Choice

A bank has $100,000 in checkable deposits and $30,000 in reserves. If the required reserve ratio is 10%, what is the amount of required reserves?

• A) $0
• B) $10,000
• C) $20,000
• D) $30,000

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Definitions:

Net Operating Cash Flow

The amount of cash generated by a company's business operations, after covering operating expenses but before investment and financing activities.

Sensitivity Analysis

A technique used to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Market Risk

The risk of financial loss due to factors that affect the entire market or economy, such as changes in interest rates, inflation, and recessions.

Simulation Analysis

Simulation analysis involves using a model to estimate how uncertain variables in a financial or project plan might affect outcomes, helping in assessing risk and making decisions.