Questions from Financial Markets

Q: Assume a Bank has $5 million in deposits and $1

Assume a Bank has $5 million in deposits and $1 million in vault cash. If the bank holds $1 million in excess reserves and the required reserves ratio is 8 percent, what level of deposits are being he...

Q: A bank has $110 million in deposits and holds $10

A bank has $110 million in deposits and holds $10 million in vault cash. a. If the required reserves ratio is 10 percent, what dollar amount of reserves must be held at the Federal Reserve Bank? b. Ho...

Q: A bank has $10 million in vault cash and $110

A bank has $10 million in vault cash and $110 million in deposits. If total bank reserves were $15 million with $2 million considered to be excess reserves, what required reserves ratio is implied?

Q: The Friendly National Bank holds $50 million in reserves at its

The Friendly National Bank holds $50 million in reserves at its Federal Reserve District Bank. The required reserves ratio is 12 percent. a. If the bank has $600 million in deposits, what amount of va...

Q: Assume that banks must hold a 2 percent reserve percentage against transaction

Assume that banks must hold a 2 percent reserve percentage against transaction account balances up and including $40 million. For transaction accounts above $40 million, the required reserve percentag...

Q: Assume that the Fed decides to increase the required reserve percentage on

Assume that the Fed decides to increase the required reserve percentage on transaction accounts above $40 million from 8 percent to 10 percent. All other information remains the same as given in Probl...

Q: Show how your answers in problem 6 would change if the fed

Show how your answers in problem 6 would change if the fed lowered the cut-off between the 2 percent rate and the 8 percent rate from $40 million in transaction account balances down to $20 million....

Q: You have been asked to assess the impact of possible changes in

You have been asked to assess the impact of possible changes in reserve requirement components on the dollar amount of reserves required. Assume the reserve percentages are currently set at 2 percent...

Q: Exchange rate relationships between the U.S. dollar and the

Exchange rate relationships between the U.S. dollar and the euro have been quite volatile. When the euro began trading at the beginning of 1999, it was valued at 1.17 U.S. dollars. By late-2000, a eur...

Q: 1. When required reserves are larger than the bank reserves of

1. When required reserves are larger than the bank reserves of a depository institution, what is the difference called? a. Excess reserves b. Deficit reserves c. Excess vault cash d. Federal Reser...