Member Banks of the Federal Reserve System

question 141

Multiple Choice

Member banks of the Federal Reserve System

• A) must maintain all reserves with their Federal Reserve Bank.
• B) may include deposits held at large city banks as legal reserves.
• C) maintain levels of reserves based on the size of the city in which they are located.
• D) are permitted to count vault cash as part of their reserves.

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Definitions:

Retained Earnings

The portion of a company's profits kept in the business after dividends are paid, used for investment or debt repayment.

Financing Activities

Activities reported in the statement of cash flows that illustrate changes in the size and composition of the equity and borrowings of a company.

Bonds Issued

Long-term debt securities issued by corporations or governments to raise funds, promising to pay back with interest.

Statement of Cash Flows

A financial document summarizing the total cash inflows from operational activities and external investments a company gets, alongside the cash outflows for business operations and investments over a specific period.