Prudent commercial bank is trying to estimate the liquidity requirements today (last day of February) for the monthof March Assume legal reserve requirements are s%00Currently the bank's total deposits are so00 millian and are expected to grow by 8 percent during the month ofMarch The bank has estimated that z0% of the total deposits are hot money deposits, 30% are vulnerable depositsand the rest are stable (core) depositsanThe liquidity manager would like to keep a liquidity reserve of Bo%% for hot money, 35% liquidity reserve for vulnerabledeposits and 1096 liquidity reserve for core depositsCurrently the bank's total loans are at 4000 million The bank expects a 200 million increase in the level of loans duringMarchEstimate the Liquidity Requirement for Prudent Commercial Bank for MarchSelect oneO a 1481O b.1680C 1280d. 1880

given information deposits = 4000 it grow by 8% hot money = 20% valnerable deposits = 30%…

Prudent commercial bank is trying to estimate the liquidity requirements today (last day of February) for the month of March Assume legal reserve requirements are s Currently the bank's total deposits are soo0 million and are expected to grow by 8 percent during the month of March The bank has estimated that zo% of the total deposits are hot money deposits, 30% are vulnerable deposits and the rest are stable (core) deposits The liquidity manager would tike to keep a liquidity reserve of B0% for hot money, 35% liquidity reserve for vulnerable deposits and 106 liquidity reserve for core deposits Currently the bank's total loans are at 4000 million The bank expects a 200 million increase in the level of loans during March

Prudent commercial bank is trying to estimate the liquidity requirements today (last day of February) for the month of March Assume legal reserve requirements are s Currently the bank's total deposits are soo0 million and are expected to grow by 8 percent during the month of March The bank has estimated that zo% of the total deposits are hot money deposits, 30% are vulnerable deposits and the rest are stable (core) deposits The liquidity manager would tike to keep a liquidity reserve of B0% for hot money, 35% liquidity reserve for vulnerable deposits and 106 liquidity reserve for core deposits Currently the bank's total loans are at 4000 million The bank expects a 200 million increase in the level of loans during March

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

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