Describe excess reserves make a bank less vulnerable to runs

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Q. Discuss-Excess reserves make a bank less vulnerable to runs. why, then, don't bankers like to hold excess reserves? What circumstances might persuade them that it would be advisable to hold excess reserves.

Q. A Treasury bond that matures in 10 years has a yield of 6%. A 10-year corporate bond has a yield of 8%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default ris premium on the corporate bond?

Reference no: EM1362353

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