The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

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Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 25, Problem 23P

To determine

To explain:

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

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Discuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.

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Discuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.

Answer 2

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Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 25, Problem 23P

To determine

To explain:

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

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Answer 3

Question

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 25, Problem 23P

To determine

To explain:

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

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Answer 4

Question

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 25, Problem 23P

To determine

To explain:

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

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Answer 5

Chapter 25, Problem 23P

To determine

To explain:

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

Answer 6

Chapter 25, Problem 23P

To determine

To explain:

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

Answer 7

Chapter 25, Problem 23P

To determine

To explain:

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 25 - Prob. 1P Ch. 25 - Prob. 2P Ch. 25 - Prob. 3P Ch. 25 - Prob. 4P Ch. 25 - Prob. 5P Ch. 25 - Prob. 6P Ch. 25 - Prob. 7P Ch. 25 - Prob. 8P Ch. 25 - Prob. 9P Ch. 25 - Prob. 10P

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

Solution Summary: The author explains that reducing the required reserve ratio does not prove to be a powerful monetary tool in case banks choose to hold substantial quantities of excess reserve.

To explain:

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

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Chapter 25 Solutions

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

Solution Summary: The author explains that reducing the required reserve ratio does not prove to be a powerful monetary tool in case banks choose to hold substantial quantities of excess reserve.

To explain: The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.

Want to see the full answer?

Chapter 25 Solutions

To explain:

The reason for reduction in the required reserve ratio not proves to be a powerful tool in case banks choose to hold considerable quantities of the excess reserve.