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 meet the minimum reserve?
A)$33.92 million.
B)$41.23 million.
C)$51.19 million.
D)$47.23 million.

Question

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 meet the minimum reserve?

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 meet the minimum reserve?
A)$33.92 million.
B)$41.23 million.
C)$51.19 million.
D)$47.23 million.

Quizplus · Accepted Answer

To meet the minimum reserve
Min = [Net reserves - (0.04 * gross reserves)] * 14 = [38.247 - (0.04 * 78.985)] * 14 = $491.226
Reserves held through 12 days = 37 * 12 = 444
To be held last two days = 491.2264 - 444 = $47.226.

A Bank Has an Average Balance of Transactions Accounts,August 10