A bank has an average balance of transactions accounts, August 10 to 23, of $824

Question

A bank has an average balance of transactions accounts, August 10 to 23, of $824.46 million. The average balance in the cash account is $42.014 million over this period. The bank is carrying forward a deficit of $1.276 million from the last reserve period. The rules require no reserves to be maintained for the first $8.5 million, 3 percent for amounts between $8.5 million and $45.8 million, and 10 percent thereafter.

1. What is the gross reserve requirement?
a. $74.653 million.
b. $78.985 million.
c. $76.747 million.
d. $72.461 million.
e. $77.866 million.
2. What is the reserve to be maintained with fed?
a. $38.247 million.
b. $34.419 million.
c. $36.971 million.
d. $35.087 million.
e. $35.695 million.

3. If over the first 12 days of the current reserve maintenance period the average daily reserve held were $37 million, what does the bank need to hold as reserves over the last two days to exactly meet the reserve requirement?
a. $86.42 million.
b. $91.46 million.
c. $79.63 million.
d. $99.14 million.
e. $87.11 million.

Explanation / Answer

d. $72.461 million. b. $34.419 million. a. $86.42 million.

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