Suppose a Bank Has $200,000 in Deposits and $150,000 in Loans

question 66

Multiple Choice

Suppose a bank has $200,000 in deposits and $150,000 in loans. What is its reserve ratio?

• A) 1 percent
• B) 5 percent
• C) 10 percent
• D) 25 percent

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Definitions:

Indirect Method

A way of calculating cash flows from operating activities by adjusting net income for changes in non-cash working capital items.

Free Cash Flow

The cash that a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Accrued Liabilities

Expenses that have been incurred but not yet paid, recorded on the balance sheet until they are paid.

Indirect Method

A method of reporting cash flows from operating activities by adjusting net income for changes in balance sheet accounts.