-Refer to Table 15

question 100

Multiple Choice

-Refer to Table 15.1. If the reserve requirement is 25 percent, what is the maximum loan that can be made by the bank?

• A) $225
• B) $375
• C) $425
• D) $475
• E) $750

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Definitions:

Legal Contract

A binding agreement between two or more parties, enforceable by law, that specifies and regulates the rights and duties of the parties involved.

Bondholder

An investor or owner of bonds issued by corporations or governments, entitled to receive interest payments and the principal amount at maturity.

Semiannual Interest

Interest calculated and paid twice a year on investments or loans.

Bond Discount

The difference when the market value of a bond falls below its original principal amount or face value.