A Bank Maintains an Average Clearing Balance of $1,000,000 with the Federal

question 84

Multiple Choice

A bank maintains an average clearing balance of $1,000,000 with the Federal Reserve.The Federal funds rate is currently 4.5 percent.What amount of credit will the bank earn over the reserve maintenance period that can be used to offset any fees charged by the Federal Reserve?

• A)$17,500
• B)$1,750
• C)$45,000
• D)$12,500
• E)None of the options is correct

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Definitions:

Advertising Expense

The cost incurred by a company to promote its products or services through various advertising channels and methods.

Departmental Sales

Revenue generated from the sales activities of specific departments within a retail or corporate setting, tracked to evaluate the performance of each department.

Retail Store

A business establishment that sells goods or services directly to consumers, primarily for personal or household consumption.

Depreciation

The systematic allocation of the cost of a tangible asset over its estimated useful life, recognizing the decrease in value over time.