If a Bank Has $100,000 in Demand Deposits and $30,000

question 19

Multiple Choice

If a bank has $100,000 in demand deposits and $30,000 on reserve with a 20 percent reserve requirement,the bank

• A)has desired reserves of $30,000.
• B)has legal reserves of $10,000.
• C)has excess reserves of $10,000.
• D)has desired reserves of $10,000.

Calculate and interpret efficiency ratios such as accounts receivable turnover and inventory turnover.

Calculate and interpret profitability ratios such as net income margin and return on equity.

Calculate and interpret solvency ratios and understand their relevance to long-term financial sustainability.

Understand the implications of paying dividends and how it affects shareholders’ wealth.

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Definitions:

Market Testing

The process of evaluating the viability of a new product or service through controlled experiments with target markets before a full-scale launch.

Business Analysis

The practice of identifying business needs and determining solutions to business problems through analysis and problem-solving strategies.

Environmental Scanning

The process of collecting, analyzing, and using information about trends, events, and relationships in an entity's external environment to assist in planning the entity's future course of action.

New-product Development Process

A series of steps that businesses follow to conceptualize, design, and bring a new product to the market, from initial ideation to commercialization.