-In the Balance Sheet for the FBN Bank Above, the Entries

question 284

Multiple Choice

-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio is 10 percent, FBN Bank has desired reserves of

• A) $360 million.
• B) $120 million.
• C) $280 million.
• D) $0.

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Definitions:

Gross Monthly Income

The total amount of income earned in a month before any deductions or taxes are applied.

Compounded Monthly

The method of computing interest that includes both the original amount of money deposited or loaned and the interest that amount has earned in past months.

Amortized

The process of spreading payments over multiple periods, typically in context of a loan or mortgage, which includes both interest and principal components.

Compounded Semi-annually

Refers to the process where interest is calculated and added to the principal balance of an investment or loan twice a year.