If a Bank Has $10 Million of Checkable Deposits,a Required

question 88

Multiple Choice

If a bank has $10 million of checkable deposits,a required reserve ratio of 10 percent,and it holds $2 million in reserves,then it will not have enough reserves to support a deposit outflow of

• A)$1.2 million.
• B)$1.1 million.
• C)$1 million.
• D)$900,000.

---

Definitions:

Par Value

The face value of a bond or stock as specified by its issuer, which does not necessarily correspond to its market value.

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout, increasing the number of shares held by each shareholder.

Retained Earnings

The portion of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business or to pay debt.

Stock Split

A corporate action that increases the number of a corporation's outstanding shares by dividing each share, which typically reduces the share price.