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. 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.

Question

Quizplus · Accepted Answer

The reserve requirement is calculated as follows: No reserves for the first $8.5 million, 3% for the next $37.3 million ($45.8 million - $8.5 million), and 10% for the remaining balance. The total reserve requirement is $79.63 million. Subtract the $37 million already held and the $1.276 million deficit, the bank needs to hold $91.46 million over the last two days.

A Bank Has an Average Balance of Transactions Accounts, August