If the Reserve Ratio Is 10 Percent and a Bank

question 62

Multiple Choice

If the reserve ratio is 10 percent and a bank receives a new deposit of $20,what happens to the bank's reserves in the longer term?

• A)Reserves increase by $2.
• B)Reserves increase by $18.
• C)Reserves increase by $20.
• D)Reserves increase by $200.

Grasp the concept and importance of net present value (NPV) in project evaluation.

Understand the concept of payback period and its utility in assessing investment decisions.

Identify scenarios where a project may have multiple IRRs and understand the implications for project evaluation.

Understand the concept and importance of benchmarking in operations management.

---

Definitions:

Accounts Receivable

Outstanding balances due to a company from its clients for products or services rendered but still unpaid.

FOB Shipping Point

A shipping term indicating that the buyer assumes responsibility for the goods and the shipping costs from the point of departure.

Freight Costs

Expenses incurred by a company for transporting goods from one place to another.

FOB Destination

A shipping term indicating that the seller pays for transportation of the goods to the buyer's location and owns the goods in transit.