If a Bank Had Demand Deposits of $80 Million and It

question 234

Multiple Choice

If a bank had demand deposits of $80 million and it faced a 25 percent required reserve ratio, it would be required to have how many reserves?

• A)​$20 million
• B)​$40 million
• C)​$60 million
• D)​$80 million

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Definitions:

Paying

The act of disbursing or settling a financial obligation.

Term Deposit

A type of bank deposit that is held at a financial institution for a fixed term or period of time, often yielding higher interest rates.

Matures

Refers to the final payment date of a financial instrument at which point the principal (and all remaining interest) is due to be paid.

Days

A unit of time measurement that typically represents a 24-hour period.