Balance sheet-actual reserves , Basic Statistics

(a)   The bank's excess reserves are its actual reserves less required reserves. Actual reserves are given as $450 from its balance sheet. Required reserves are given by the product of the required reserve ratio and demand deposits, i.e., 10% * $5,000 = $500. Thus the excess reserves are equal to $450 - $500 = -$50. This implies that the bank has no excess reserves and even it does not maintain the required reserve ratio.

(b)  The bank can lend an additional amount equal to its excess reserves. But since in this case, there are no excess reserves, the bank cannot lend anything.

 

Posted Date: 3/14/2013 3:34:39 AM | Location : United States







Related Discussions:- Balance sheet-actual reserves , Assignment Help, Ask Question on Balance sheet-actual reserves , Get Answer, Expert's Help, Balance sheet-actual reserves Discussions

Write discussion on Balance sheet-actual reserves
Your posts are moderated
Related Questions
State income tax In most declares paycheck accounting will involve a condition earnings tax. In those declares a company is necessary to hold the condition earnings tax that an


Probability 3DP, a Luxembourg-based company plans to develop and sell highly specialized 3D printers. The cost of product development is estimated at EUR 50,000.-, irrespective

what are the biomechanical techniques for swimming freestyle?

Consider the two events A and B with P(A) = 0.4 and P(B) = 0.3. (a) If A and B are independent then compute the probability that Both A and B happen

What are the consequences of non-compliance to each accounting concepts?

Write a sample Results section, discussing your data screening activity.

what are the types of index numbers?

Which date is used to record a credit card transaction? When a company uses its bank greeting cards, the transaction time frame is the time frame the bank greeting cards is used

i want to see if my assignment can be done?