If a Bank Has a Required Reserve Ratio of 25

question 48

Multiple Choice

If a bank has a required reserve ratio of 25% and there is $10,000 in deposits,what is the maximum amount of loans that this bank can make?

• A) $40,000
• B) $10,000
• C) $0
• D) $2,500
• E) $7,500

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Definitions:

Voting Shares

Shares that give the shareholder the right to vote on matters of corporate policy and the election of the board of directors.

Carrying Value

The book value of an asset on a company’s balance sheet, calculated as its original cost minus accumulated depreciation or amortization.

Voting Shares

Another term for voting equity interests, specifically referring to shares that allow the shareholder to vote on corporate decisions.

Non-Operating Sources

Revenue or income that arises from activities not related to a company’s core business operations.