Reserve Requirements

question 97

Multiple Choice

Reserve requirements:

• A) set the maximum amount of reserves a bank must hold.
• B) set the minimum amount of reserves a bank must hold.
• C) are established by the federal government.
• D) are set by the Canadian Bankers Association.

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Definitions:

Market Risk Premium

The supplementary income expected by an investor for investing in a hazardous market portfolio rather than in assets free from risk.

Constant Dividend Growth Rate

The rate at which a company's dividend payments are expected to grow at a constant percentage each year.

Expected Return

Expected return is the anticipated average return of an investment over a specified period, taking into account both expected gains and potential losses.

Required Return

The Required Return is the minimum expected return an investor anticipates on an investment to make it worthwhile, encompassing the risk-level associated with the investment.