If the Reserve Requirement Was 10 Percent, a $100 Deposit

question 91

Multiple Choice

If the reserve requirement was 10 percent, a $100 deposit could result in a ________ increase in new deposits for all banks in the system.

• A) $200
• B) $500
• C) $1000
• D) $10 000
• E) $100 000

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Definitions:

Residual Dividend Policy

A strategy where a company pays dividends out of the residual or leftover equity only after all project capital needs are met.

Target Capital Structure

The ideal mix of debt, equity, and other financing sources a company aims to hold, used to optimize its financial performance and risk profile.

Capital Budget

The budgeting process relating to expenses for major capital, or investment, projects and purchases in a company.

Total Dividend Payment

The sum of all dividends that a company pays out to its shareholders for a specific period.