A Reserve Requirement of 25 Percent Would Mean That Each

question 160

Multiple Choice

A reserve requirement of 25 percent would mean that each dollar of reserves could support ____ of demand deposits.

• A)​$0.25
• B)​$0.75
• C)​$1.33
• D)​$4.00

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Definitions:

CCA

Capital Cost Allowance; a tax deduction in Canada for the depreciation of tangible property.

Earnings Before Interest And Taxes

A measure of a firm's profit that includes all income and expenses except interest and income tax expenses.

Retained Earnings

The portion of a company's profits that is kept or retained rather than distributed to shareholders or owners as dividends.

Net New Equity

The amount of equity capital a company raises through the issuance of new shares minus any shares it has bought back, reflecting the net increase in share capital.