Use the Following Balance Sheet for the ABC National Bank

question 120

Multiple Choice

Use the following balance sheet for the ABC National Bank in answering the question.Assume the required reserve ratio is 20 percent. $\begin{array}{c}\begin{array}{lll}\quad\quad\quad\underline{\text { Assets}}\\\text { Reserves}\\\text { Securities}\\\text { Loans}\\\text { Property} \end{array}\begin{array}{l}\\\$ 27,000 \\50,000 \\33,000 \\200,000\end{array}\begin{array}{lll}\quad\quad \underline{\text { Liabilities \& Net Worth }}\\\text { Checkable Deposits}\\\text { Stock Shares}\\\\\\\end{array}\begin{array}{lll}\\\$1,100\\200,000\\\\\\\end{array}\end{array}$



Refer to the data.This commercial bank has excess reserves of:

• A) $0.
• B) $3,000.
• C) $12,000.
• D) $5,000.

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Definitions:

Principal

The principal refers to the initial amount of money lent or invested, excluding any interest or growth.

Annual Rate

The interest rate for a period of one year, often used as a benchmark for savings or loan interest calculations.

Investment

The process of distributing funds or other resources with the goal of earning returns or profits.

Interest

The cost of borrowing money or the profit from lending money, usually expressed as a percentage rate over the period of one year.