Note: You must use formulas and cell references when computing all values in the GREEN CELLS. 1. Consider a bank policy to maintain 12% of deposits as reserves. The bank currently has $10 million in deposits and holds $400,000 excess reserves.What is the required reserve on a new deposit of $50,000?Solution:Required reserve ratio + excess reserve ratio =Excess reserve ratio =Required reserve ratio =The required reserve is:

To calculate the required reserve for a new deposit of $50,000 based on the given data:1. Required…

Answered: 1. Consider a bank policy to maintain…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Examine the Falance sheet for a bank below: Assets Liabilities Reserves 600 000 Demand Deposits 5 230 000 Loans 2 000 000 Capital 1 250 000 Buildings 3 880 000 If the desired reserve ratio changes to 5 percent and the bank were to loan out those excess reserves, what is the otential expa nsion in demand deposits (increase in MS) in the banking system? ***You just need to put the number in your answer, no units or commas*** Answer:
2. Assume that a particular bank has excess reserves of Php800,000 and checkable deposits of Php1,500,000. If the reserve ratio is 20%, what is the size of the bank's actual reserves?
A bank has $400 million in demand deposits and desires a 20 percent reserve ratio. How much will it hold as reserves? O a. $200 million O b. $120 million O c. $80 million O d. $500 million
If a bank has $200,000 of checkable deposits, a required reserve ratio of 20 percent, and it holds $80,000 in reserves, then the maximum deposit outflow it can sustain without altering its balance sheet is A) $50,000. B) $40,000. C) $30,000. D) $25,000. Answer: A How to solve it?
1. A bank has deposits of 100 billion and leverage ratio of 12. Assume that it has a reserve ratio of 20 percent, and it holds no excess reserves. Further suppose that bank capital is $36 billion. Lump all assets besides ‘reserves’ into a category labeled ‘other’.a) Write down a t-account for the bank. Briefly explain how you come up with any number.b) Suppose the new legislation requires banks to have a reserve ratio of at least 30 percent. The bank meets this requirement by issuing new debt. There is no change in the amount of deposits. Show the new t-account. What is the new leverage ratio? (Please answer the entire question)
Bank A just received total deposit equal to $30,700,000.00. Required reserve ratio for the banking system is set at 2.1%, (or 0.021). a. How much of the total deposit can bank A lend out? In other words, what is bank A's excess reserve? $ b. By how much will total money supply change if bank A, and all subsequent banks, are able to lend out their entire excess reserves as the result of the initial $30,700,000.00 deposit in bank A? $
D1. Please redraw the balanced T-account.
| Suppose that FirstBank has the following simplified balance sheet. Assume that all other components of the balance sheet are equal to zero. Assets Liabilities reserves 3,920 demand deposits 32,000 loans 28,080 32,000 32,000 Assume that the reserve ratio is r= .10 (10%). a. Does FirstBank have excess reserves? If so, of how much? b. Suppose that FirstBank desires to hold no excess reserves, so it loans out its excess reserves to borrowers. How does the balance sheet change? Either use T-accounts or a new balance sheet to show. c. Starting back in a), what is the maximum deposit outflow that FirstBank can sustain without affecting other parts of the balance sheet?
Suppose a bank currently has $250,000 in deposits and $27,000 in reserves. The required reserve ratio is 10%. If at the end of the day, there is an unexpected withdrawal of $4,000 in reserves, what is the bank's resulting reserve ratio (expressed as a %)? Using the information from the prior problem, how much would the bank need to borrow in either the Fed Funds market or at the discount window, to be in complicance with the required reserve ratio?
Suppose a bank currently has $250,000 in deposits and $27,000 in reserves. The required reserve ratio is 10%. If at the end of the day, there is an unexpected withdrawal of $4,000 in reserves, how much would the bank need to borrow in either the Fed Funds market or at the discount window, to be in complicance with the required reserve ratio?
The first California Bank has $1.5 million in total reserves and $4 million in checking account balances. What is the bank’s reserve position if the required reserve ratio (rD) is 20%? (i.e., What is the level of required reserves and the level of excess reserves?)

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