Please answer competely Riel Bank has a reserve ratio of 5%, $22 million issued in deposits, and $1,100,000 in actual reserves. Enter your responses below rounded toa whole number. Include a minus sign (-) for any negative values.a. The bank's initial desired reserves are $ 1100000and its initial excess reserves are $b. If $110,000 in currency is withdrawn in the bank, its excess reserves become $ (110000)c. The money multiplier in this banking system is20d. The final amount by which the money supply can change once the contraction of money in the banking system is complete is $2090000

Solution:- a)Calculation of banks initial desired ratio and initial excess reserves as follows:-…

Answered: Riel Bank has a reserve ratio of 5%,…

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

See similar textbooks

Similar questions

Suppose the Schoof Company has this book value balance sheet: The notes payable are to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the companys permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of 1,000, an annual coupon interest rate of 6%, and a 20-year maturity. The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield to maturity on the bonds. The common stock sells at a price of 60 per share. Calculate the firms market value capital structure.
Suppose a bank currently has $250,000 in deposits and $27,000 in reserves. The required reserve ratio is 10%. If at the end of the day, there is an unexpected withdrawal of $4,000 in reserves, what is the bank's resulting reserve ratio (expressed as a %)? Using the information from the prior problem, how much would the bank need to borrow in either the Fed Funds market or at the discount window, to be in complicance with the required reserve ratio?
If a bank has $200,000 of checkable deposits, a required reserve ratio of 20 percent, and it holds $80,000 in reserves, then the maximum deposit outflow it can sustain without altering its balance sheet is A) $50,000. B) $40,000. C) $30,000. D) $25,000. Answer: A How to solve it?
National Bank currently has $500 million in transaction deposits on its balance sheet. The current reserve requirement is 15 percent. The Federal Reserve decreases this requirement to 10 percent. Assume National Bank does not keep any excess reserve before and after the change in reserve ratio. National Bank is the only commercial bank in this economy. Show the balance sheet of the Federal Reserve and National Bank before and after the reserve requirement change if National Bank does not keep any excess reserve after the change in reserve ratio, and public deposit all the cash in National Bank as transaction deposits.
XYZ bank currently has 600 million in transaction deposits on its balance sheet. The current reserve requirement, set by the central bank, is 8%. The central bank has decided to increase the reserve requirement from 8% to 10%. Show the effect of their decision on: Required reserve. Excess reserve. Change in bank deposit.
Suppose a bank currently has $250,000 in deposits and $27,000 in reserves. The required reserve ratio is 10%. If at the end of the day, there is an unexpected withdrawal of $4,000 in reserves, how much would the bank need to borrow in either the Fed Funds market or at the discount window, to be in complicance with the required reserve ratio?
A new bank has vault cash of $1.7 million and $5 million in deposits held at its Federal Reserve District Bank. a) the required reserves ratio is 8 percent, approximately what dollar amount of deposits can the bank hold? (Answer in millions) Bank deposits $Type your answer here million b) If the bank holds $72 million in deposits and currently holds bank reserves such that excess reserves are zero, what required reserves ratio is implied? (Round answer to 1 decimal place, e.g. 5.1.) Required reserves ratio Type your answer here
Consider a bank policy to hold reserves equal to 15% of bank deposits. The bank currently has $25 million in deposits and holds $1 million of excess reserves. What is the required reserve on a new deposit of $500,000? Please answer in dollars. If the Fed decides to conduct contractionary monetary policy by selling $250 million in UST bonds, how much will the money supply change by if the required reserve ration is 15%? Please express you answer in millions of dollars.
Bank Three currently has $850 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits. a. If the Federal Reserve decreases the reserve requirement to 4 percent, show the balance sheet of Bank Three and the Federal Reserve System just before and after the full effect of the reserve requirement change. Assume Bank Three withdraws all excess reserves and gives out loans and that borrowers eventually return all of these funds to Bank Three in the form of transaction deposits.b. Redo part (a) using a 10 percent reserve requirement.
Bank Three currently has $650 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits. a. If the Federal Reserve decreases the reserve requirement to 4 percent, show the balance sheet of Bank Three and the Federal Reserve System just before and after the full effect of the reserve requirement change. Assume Bank Three withdraws all excess reserves and gives out loans and that borrowers eventually return all of these funds to Bank Three in the form of transaction deposits
Bank Three currently has $600 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 10 percent of transaction deposits. (LG 4-3) If the Federal Reserve decreases the reserve requirement to 8 percent, show the balance sheet of Bank Three and the Federal Reserve System just before and after the full effect of the reserve requirement change. Assume Bank Three withdraws all excess reserves and gives out loans and that borrowers eventually return all of these funds to Bank Three in the form of transaction deposits. Redo part (a) using a 12 percent reserve requirement.
If a bank has a positive interest-sensitive gap, one of the possible management responses would be to: wait for the interest rates to rise or be shorten asset decrease interest-sensitive increase interest-sensitive The First National Bank of Trinidad reports a net interest margin of 5.83 percent. It has total interest revenues of $275 million and total interest expenses of $210 million. What will be the bank's earning assets total? $4,717 million $3,602 million $1,115 million $3,790 million The First National Bank of Trinidad reports a net interest margin of 5.83 percent. It has total interest revenues of $275 million and total interest expenses of $210 million. This bank has earnings assets of $1,115. Suppose this bank's interest revenues rise by 8 percent and its interest expenses and earnings assets rise by 10 percent what is this bank's new net interest margin? 83 percent 09 percent 59 percent 38 percent If Fifth National Bank's asset duration exceeds its…

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS