A Bank Has an Average Balance of Transactions Accounts,August 10

question 48

Multiple Choice

A bank has an average balance of transactions accounts,August 10 to 23,of $824.46 million.The average balance in the cash account is $42.014 million over this period.The bank is carrying forward a deficit of $1.276 million from the last reserve period.The rules require no reserves to be maintained for the first $8.5 million,3 percent for amounts between $8.5 million and $45.8 million,and 10 percent thereafter.

If over the first 12 days of the current reserve maintenance period the average daily reserve held were $37 million,what does the bank need to hold as reserves over the last two days to meet the minimum reserve?

• A)$33.92 million.
• B)$41.23 million.
• C)$51.19 million.
• D)$47.23 million.

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Definitions:

Annual Cash Inflows

The total amount of money received by a company or individual within a year from various sources.

Economic Life

Economic life is the estimated period over which an asset is expected to be useful to the owner for the purpose of generating income or other economic benefits.

Internal Reports

Reports generated within an organization for the purpose of decision making by management, not for public dissemination.

Actual Impact

The real effect or consequence that an event, decision, or action has had.