The Huge Jump in Depository Institutions' Reserves at the Fed

question 134

Multiple Choice

The huge jump in depository institutions' reserves at the Fed in recent years can be attributed to _____

• A) the Fed paying a small amount of interest on its excess bank reserves.
• B) the Fed charging a small amount of interest on its excess bank reserves.
• C) the Fed purchasing securities from the banks.
• D) the banks feeling insecure about creating new loans.
• E) the uncertainty of banks about their ability to manage their funds.

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Definitions:

Noncumulative Preferred Stock

A type of preferred stock where dividend payments are not required to be paid in periods when they are not declared.

Dividends Received

The payments a shareholder receives from a company out of its profits or reserves as a return on the shareholder's investment.

Par Value

The face value of a bond or stock as stated by the issuing company, not necessarily its market value.

Cash Dividend

A financial distribution from a firm's profits to its investors, typically provided as cash.