A Bank Is Required to Maintain an Average Daily Balance

question 47

Multiple Choice

A bank is required to maintain an average daily balance at the Fed of $700 million.On the first day of the maintenance period it maintains a balance of $750 million,the next two days it maintains a balance of $725 million,the next three days it maintains a balance of $625 million,the next three days it maintains a balance of $775 million,the next two days it maintains a balance of $700 million,and the next two days it maintains a balance of $675 million.What does its balance at the Fed has to be on the last day of the maintenance period in order to have a zero cumulative reserve deficit?

• A)$700 million
• B)$650 million
• C)$750 million
• D)$325 million
• E)None of the options is correct

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Definitions:

Rate Of Return

The percentage gain or loss on an investment relative to the amount of money invested.

Stocks

Financial instruments that represent ownership in a company and signify a claim on part of the company's assets and earnings.

Long-Term Investor

An individual or entity that holds investments for an extended period, focusing on long-term performance rather than short-term gains.

Equity Mutual Fund

A type of mutual fund that invests primarily in stocks, aiming to generate returns through equity ownership in companies.