score: 0 of 1 pt 19 of 20 (19 complete Concept Question 56 A bank\'s only liabil

Question

score: 0 of 1 pt 19 of 20 (19 complete Concept Question 56 A bank's only liabilities are $12 milion in transactions deposits. The bank currenty meets its reserve requirement and it holds no excess reanes The requined reseve raio a d 69 Assuming that its only assets are legal reserves, loans, and securiies, calculate the value of loans and secuntes held by the bank The value of loans and securisies held by the bank is Smillion(Eber yoor response rounded to two decimal piaces) The value of loans and secuintes held by the bank is s milion. (Eiter your nesponse rounded to bso decimal plsces)

Explanation / Answer

Total deposits: $12 million

Reserve ratio = 0.08 or 8%

Thus, required reserves held in bank = 8% of $12 million = $0.96 million

Since there are no excess reserves, the bank will loan out the remaining reserves it has.

That is, $12 million - $0.96 million = $11.04 million

Hence, loans and securities = $11.04 million

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.