A Bank's Legal Reserve Requirements Consist of

question 71

Multiple Choice

A bank's legal reserve requirements consist of

• A) the bank's holdings of cash and deposits with the Federal Reserve Bank.
• B) the value of a bank's assets.
• C) checkable deposits plus net worth.
• D) the difference between bank assets and liabilities.
• E) the sum of direct and indirect transfers plus deposits.

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Definitions:

Bond Prices

The market value of a bond, which inversely changes with interest rates.

Subordinated Debt

Debt with a lower priority for the payment of interest and principal than other (senior) debt.

Senior Debt

Senior debt is a loan or bond that takes priority over other unsecured or junior debt owed by the issuer.

Convertible

A type of financial security, such as a bond or preferred stock, that can be converted into a specified amount of another type, typically common stock, at the holder's option.