The table below shows the balance sheet of Eubank.If Eubank is holding no excess reserves,its required reserve must be:
?Table 14.1
?
EUBANK
?
$$\begin{array} { | l | r | r | r | }
\hline \text { Assets } & { \text { Liabilities and Net Worth } } & \
\hline & & & \
\hline \text { Deposits at the Fed } & \$ 40,000 & \text { Checkable deposits } & \$ 500,000 \
\hline \text { Cash } & \$ 10,000 & \text { Net Worth } & \$ 20,000 \
\hline \text { Loans } & \$ 300,000 & & \
\hline \text { Securities } & \$ 150,000 & & \
\hline \text { Fed Stock } & \$ 20,000 & & \
\hline
\end{array}$$

Question

The table below shows the balance sheet of Eubank.If Eubank is holding no excess reserves,its required reserve must be:
?Table 14.1
?
EUBANK
?
$$\begin{array} { | l | r | r | r | } 
\hline \text { Assets } &  { \text { Liabilities and Net Worth } } & \
\hline & & & \
\hline \text { Deposits at the Fed } & \$ 40,000 & \text { Checkable deposits } & \$ 500,000 \
\hline \text { Cash } & \$ 10,000 & \text { Net Worth } & \$ 20,000 \
\hline \text { Loans } & \$ 300,000 & & \
\hline \text { Securities } & \$ 150,000 & & \
\hline \text { Fed Stock } & \$ 20,000 & & \
\hline
\end{array}$$

Quizplus · Accepted Answer

The required reserve is calculated based on the percentage of checkable deposits that a bank must hold in reserve. Given that Eubank is holding no excess reserves and its total reserves (deposits at the Fed + cash) amount to $50,000 ($40,000 + $10,000), and the checkable deposits are $500,000, the required reserve ratio is $50,000 / $500,000 = 0.1 or 10 percent.

The Table Below Shows the Balance Sheet of Eubank A)5 Percent B)4 Percent C)10 Percent D)20 Percent E)2 Percent

The Table Below Shows the Balance Sheet of Eubank A)5 Percent
B)4 Percent
C)10 Percent
D)20 Percent
E)2 Percent