the liquidity requi s March. Assume legal reserve requirements are 5%. Currently the bank's total deposits are sooo million and are expe The bank has estimated that 20% of the total deposits are hot mc rest are stable (core) deposits. The liquidity manager would like to keep a liquidity reserve of 8o9 deposits and 10% Tiquidity reserve for core deposits Currently the banks total loans are at 4000 million. The bank expec March.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter12: The Cost Of Capital
Section: Chapter Questions
Problem 15P
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Prudent commertial bank is trying to estimate the liquidity requirements today (last day of February) for the month of
March Assume legal reserve requirements are 5%.
Currently the bank's total deposits are so0o million and are expected to grow by s percent during the month of March.
The bank has estimated that 20% of the total deposits are hot money deposits. 30% are vulnerable deposits and the
rest are stable (core) deposits.
The liquidity manager would like to keep a liquidity reserve of 8o% for hot money, 35% liquidity reserve for vulnerable
deposits and 109% Tiquidity reserve for core deposits.
Currently the bank's total loans are at 400o million. The bank expects a 400 million reduction in the level of loans during
March.
Estimate the Liquidity Requirement for Prudent Commercial Bank for March.
Select one
a. 1680
b.1481
C1880
d. None of these
e. 1280
Transcribed Image Text:Prudent commertial bank is trying to estimate the liquidity requirements today (last day of February) for the month of March Assume legal reserve requirements are 5%. Currently the bank's total deposits are so0o million and are expected to grow by s percent during the month of March. The bank has estimated that 20% of the total deposits are hot money deposits. 30% are vulnerable deposits and the rest are stable (core) deposits. The liquidity manager would like to keep a liquidity reserve of 8o% for hot money, 35% liquidity reserve for vulnerable deposits and 109% Tiquidity reserve for core deposits. Currently the bank's total loans are at 400o million. The bank expects a 400 million reduction in the level of loans during March. Estimate the Liquidity Requirement for Prudent Commercial Bank for March. Select one a. 1680 b.1481 C1880 d. None of these e. 1280
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