If a Bank Has Deposits of $250 Million, Reserves That

question 43

Multiple Choice

If a bank has deposits of $250 million, reserves that total $30 million and has a required reserve rate of 10 percent:

• A) the bank is short of required reserves.
• B) the bank has excess reserves of $27.5 million.
• C) the bank has excess reserves of $5 million.
• D) the bank has excess reserves of $3 million.

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Definitions:

Goodwill

An intangible asset representing the value of a company's brand, customer relationships, and other non-physical assets acquired during a purchase.

Common Stock

Represents ownership shares in a corporation, giving holders voting rights and a share in the company's profits through dividends.

Undervalued

Describes a security or other type of investment that is selling for a price presumed to be less than its true intrinsic value.

Overvalued

A term describing a situation in which a security or an asset is trading at a price exceeding its intrinsic value.