Table 29-5. -Refer to Table 29-5. If the Bank Faces a Reserve

question 457

Multiple Choice

Table 29-5.
-Refer to Table 29-5. If the bank faces a reserve requirement of 8 percent, then the bank

• A)is in a position to make a new loan of $14,000.
• B)has fewer reserves than are required.
• C)has excess reserves of $16,400.
• D)None of the above is correct.

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Definitions:

Shareholders' Equity

Represents the ownership interest of shareholders in a corporation, calculated as total assets minus total liabilities.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date, often with interest.

Financial Position

A firm's economic state, reflected by its assets, liabilities, and equity at a given moment.

Shareholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing what the shareholders own outright.