An FI Has $5 Million in Cash Reserves with the Fed

question 87

Multiple Choice

An FI has $5 million in cash reserves with the Fed in excess of its reserve requirements, $5 million in T-Bills, and a credit line of $10 million to borrow in the repo market. It currently has lent $2 million in the Fed Funds market and borrowed $1 million from the Federal discount window to meet its seasonal needs.
-Assume that the T-Bills can only be sold at a 10 percent discount, what is the net liquidity of the bank given this information?

• A)$6.5 million.
• B)$11.5 million.
• C)$16.5 million.
• D)$20.5 million.
• E)$21.5 million.

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Definitions:

Identical Alleles

Alleles that are the same at the same locus on both chromosomes in a pair, resulting in a uniform expression of a trait.

Homologous Chromosomes

Pairs of chromosomes in a diploid organism, one inherited from each parent, that have corresponding gene sequences and structures.

Crossing Over

A genetic process occurring during meiosis where homologous chromosomes exchange segments of genetic material to form recombinant chromosomes, contributing to genetic diversity.

Same Chromosome

Refers to genes or genetic markers located on the same chromosome and often inherited together.