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

question 401

Multiple Choice

Table 29-5.
-Refer to Table 29-5. Suppose the bank faces a reserve requirement of 10 percent. Starting from the situation as depicted by the T-account, a customer deposits an additional $60,000 into his account at the bank. If the bank takes no other action it will

• A)have $64,000 in excess reserves.
• B)have $4,000 in excess reserves.
• C)be in a position to make new loans equal to $6,000
• D)None of the above is correct.

---

Definitions:

Balance Sheet Exposures

The risks shown on a balance sheet due to fluctuations in foreign exchange rates, interest rates, and other variables affecting asset and liability values.

Foreign Operations

Business activities conducted in a country different from the company's home country, often requiring management of currency exchange, legal, and cultural differences.

Days' Sales

A financial metric indicating how quickly a company's inventory is sold and replaced over a specific period.