Which Statement Is True

question 332

Multiple Choice

Which statement is true?

• A)Actual reserves - required reserves = excess reserves.
• B)Required reserves - actual reserves = excess reserves.
• C)Required reserves + actual reserves = excess reserves.
• D)None of the statements are true.

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Definitions:

Compound Interest

Interest computed on both the original amount of money and on the interest that it has already earned in past periods.

Earnings Rate

The rate at which a company generates income relative to assets, investments, or equity.

Internal Rate of Return

A metric used in financial analysis to estimate the profitability of potential investments, calculated as the rate of return that makes the net present value of all cash flows from a particular project equal to zero.

Compound Interest

A way of calculating interest whereby the charge is based on the initial principal amount as well as on the interest that has accumulated in prior periods of a loan or deposit.