The Use of Lagged Reserve Accounting Makes the Demand for Reserves

question 106

Multiple Choice

The use of lagged reserve accounting makes the demand for reserves:

• A)Highly unpredictable
• B)Constant
• C)More predictable
• D)Subject to daily changes by the Fed

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Definitions:

Transferability

The ability of an asset or property right to be sold or otherwise transferred from one party to another.

Watered Stock

Shares issued by a company at a value much greater than its asset worth, inflating its apparent value without actual backing.

Fair Market Value

An estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller in the market.

Business Judgment Rule

A legal principle protecting corporate directors and officers from liability for decisions made in good faith and in the best interest of the company.