A Bank Has $132,000 in Excess Reserves and the Required

question 26

Multiple Choice

A bank has $132,000 in excess reserves and the required reserve ratio is 11 percent.This means the bank could have __________ in checkable deposit liabilities and __________ in (total) reserves.

• A) $4,000,000; $590,000
• B) $1,000,000; $110,000
• C) $5,000,000; $5,869,000
• D) $4,700,000; $869,000

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Definitions:

Invoice Price

The initial price stated by a manufacturer or producer on the invoice sent to a wholesaler or retailer, before any discounts or allowances.

Coupon Bond

A debt security that pays the holder periodic interest payments until maturity, at which point the principal is repaid.

Current Yield

The annual income from an investment expressed as a percentage of the current market price.

Trading

The act of buying, selling, or exchanging financial assets in markets with the goal of making profits from price movements.