If Banks 'R Us Has a Reserve Ratio of 12

question 54

Multiple Choice

If Banks 'R Us has a reserve ratio of 12.5% and keeps $100 in reserve, then Banks 'R Us's deposits are:

• A) $1250
• B) $12.50
• C) $800
• D) $80

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Definitions:

Short Hedger

An investor who enters into contracts or investment positions to reduce the risk of price decreases in an asset they currently own or plan to own.

Basis

In finance, the difference between the spot price of an asset and the future price, or the inverse, depending on the context.

Long Hedger

A long hedger is an investor or company that enters into a hedge transaction to protect against a rise in the price of an asset in the future.

Short Hedger

A short hedger is an investor or trader who enters into contracts to sell an asset in the future to hedge against the risk of falling prices.