Table 14-3 -Refer to Table 14-3.Consider the Above Simplified Balance Sheet for Simplified

question 42

Multiple Choice

Table 14-3

-Refer to Table 14-3.Consider the above simplified balance sheet for a bank.If the required reserve ratio is 10 percent,the bank can make a maximum loan of

• A)$2,000.
• B)$5,000.
• C)$6,300.
• D)$45,000.

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Definitions:

Discounted

refers to a price that has been reduced from the original or list price, often to encourage sales or clear inventory.

Maturity Value

The amount payable to the holder of a financial instrument upon its maturity, including both the principal and the interest.

360-Day Year

A financial convention that simplifies the interest calculation by assuming a year has 360 days.

Maturity Date

The specified date on which the final payment of a loan or financial instrument must be paid, at which point the principal (and all remaining interest) is due to be paid.