Suppose Banks Desire to Hold No Excess Reserves

question 158

Multiple Choice

Suppose banks desire to hold no excess reserves.If the reserve ratio is 10 percent and a bank receives a new deposit of $10.Then this bank

• A)must increase required reserves by $1.
• B)will initially see its total reserves increase by $1.
• C)will be able to make new loans up to a maximum of $1.
• D)All of the above are correct.

Calculate and interpret the capacity utilization and the implications for firm growth.

Understand and calculate the retention ratio.

Calculate the payout ratio and its implications on the firm’s dividends policy.

Analyze and calculate the internal growth rate for a firm.

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Definitions:

Gram-positive

Bacteria that retain the crystal violet stain used in the Gram staining method, indicating a thick peptidoglycan layer in their cell walls.

Gram-variable

Bacteria that do not consistently stain as either Gram-positive or Gram-negative due to variations in their cell wall structures.

Opaqueness

The quality of being impenetrable by light; not transparent or translucent.

Decant

To pour a liquid from one container into another, usually to separate a solid from a liquid or to allow sediment to stay behind.