A Bank Has $30,000 in Deposits and Has $5,400 in Reserves

question 182

Short Answer

A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?

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Definitions:

Financial Risk

The possibility of losing money on an investment or business venture, including the risk of losing some or all of the original investment.

Financial Leverage

The use of borrowed funds to increase the potential return of an investment, amplifying both potential gains and losses.

Net Income

The total earnings of a company after subtracting all expenses from revenue, including taxes and interest.

Debt Financing

A method of raising capital through the sale of bonds, bills, or notes to individual and/or institutional investors, in return for lending the company money.