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If a Bank's Desired Reserve-Deposit Ratio Is 0

question 47

Multiple Choice

If a bank's desired reserve-deposit ratio is 0.33 and it has deposit liabilities of $100 million and reserves of $50 million, it:


Definitions:

Bond Principal

Bond principal, or face value, is the amount that the issuer agrees to pay the bondholder at maturity, excluding any interest payments.

Coupon Rate

The interest rate on a bond, determined as a percentage of the bond's face value, that the issuer promises to pay the bondholder annually.

Market Rate

The current price or interest rate at which an asset or service can be bought or sold in a particular market.

Secured Bond

Specific assets are pledged as a guarantee of repayment at maturity.

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