Consider the Following Situation in the Canadian Banking System

Consider the following situation in the Canadian banking system:
∙ The Bank of Canada purchases $5 million worth of government securities
from an investment dealer with a cheque drawn on the Bank of Canada.
∙ The dealer deposits this cheque at Bank XYZ,a commercial bank.
∙ The target reserve ratio for all commercial banks is 25%.
∙ All commercial banks operate with no excess reserves.
∙ There is no cash drain.
TABLE 26-4
-Refer to Table 26-4.Bank XYZ is immediately in a position to expand its loans by

A) $1.25 million.
B) $3.75 million.
C) $5 million.
D) $15 million.
E) $20 million.