The Table Given Below Records the Amount of New Deposits

question 13

Multiple Choice

The table given below records the amount of new deposits, the value of required reserves, and total amount loaned out by Banks 1, 2, and 3.
Table 12.3
$\begin{array}{l}\begin{array}{|c|c|c|c|}\hline \text { Bank } & \text { New Deposit } & \begin{array}{c}\text { Required } \\\text { Reserves }\end{array} & \text { Loans } \\\hline \text { Bank 1 } & \$ 10,000 & \$ 1,000 & \$ 9,000 \\\hline \text { Bank 2 } & \$ 9,000 & \$ 900 & \$ 8,100 \\\hline \text { Bank 3 } & \$ 8,100 & \$ 810 & \$ 7,290 \\\hline\end{array}\\\text { *Assume all excess reserves are loaned out. }\end{array}$
-Refer to Table 12.3. What is the reserve requirement?

• A) 11 percent
• B) 90 percent
• C) 10 percent
• D) 9 percent
• E) 19 percent

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Definitions:

Significant Influence

The capacity of an investor to affect the financial or operating policies of an investee, typically through ownership of a significant but not majority share.

Retained Earnings

The portion of a company's profit that is held or retained and not paid out as dividends to shareholders.

Interest Rate Swap

A financial derivative contract in which two parties agree to exchange one stream of interest payments for another, based on a specified principal amount.