Table 10-4 The Following Information Pertains to the Bank of Moncton

question 12

Multiple Choice

Table 10-4
The following information pertains to the Bank of Moncton.
-Refer to the Table 10-4.If all banks hold only the required 4 percent of deposits as reserves,then what is the money multiplier?

• A) 5
• B) 10
• C) 15
• D) 25

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Definitions:

Clearinghouse

An intermediary agency that facilitates the clearing and settling of financial transactions, often associated with exchanges and securities.

Profit

The earnings resulting when business activity revenues exceed the necessary expenses, costs, and taxes to maintain the activity.

Long Oil Futures Contract

An agreement to buy oil at a specified price on a specified future date, bet taken with the expectation that oil prices will rise.

Close Position

The act of selling or buying securities to offset an existing position, thereby ending the investor's exposure to that investment.