Answer the Question Based on the Following Balance Sheet for the First

question 114

Multiple Choice

Answer the question based on the following balance sheet for the First National Bank. Assume the reserve ratio is 15 percent: Refer to the data above. If a check for $20,000 is drawn and cleared against this bank, it will then have excess reserves of:

• A) $15,000
• B) $20,000
• C) $25,000
• D) $30,000

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Definitions:

APR

Annual Percentage Rate; a comprehensive measure of the cost of borrowing on an annual basis, including interest and other fees.

Monthly-Compounded

Monthly-Compounded refers to the process of applying interest on an investment or loan on a monthly basis, where each month's interest is added to the principal.

EAR

Effective Annual Rate, the actual return on an investment or the actual interest rate on a loan over one year, including compounding.