If the Mortgages Are Securitized and Deposits Are Reduced, How

question 56

Multiple Choice

If the mortgages are securitized and deposits are reduced, how much will the bank save in the first year's reserve requirements and deposit insurance premiums in total?

• A) $144,460,800
• B) $160,512,000
• C) $165,476,200
• D) $178,332,500
• E) $181,249,300 150-6 = 144M deposits available to finance mortgages requires [(150,000,000 - 6,000,000) / (1 - 0.1)] = 160M deposits. Reserve requirements are 160M x 0.1 = 16M; Deposit insurance premiums = (160,000,000 x 0.0032) = 512,000; total = $160,512,000

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