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.
E)$46.05 million.

Question

Quizplus · Accepted Answer

To solve the problem, we need to use the formula:
Minimum reserve = Average daily reserve x Number of days in the maintenance period
Let's assume the total number of days in the maintenance period is 14 (as there are 12 days given in the question, and we need to find the reserve for the last two days). 
The minimum reserve required would be:
Minimum reserve = $37 million x 14 = $518 million
We know that the bank has already held an average daily reserve of $37 million over the first 12 days, which means the bank has already held:
Amount held over first 12 days = $37 million x 12 = $444 million 
To meet the minimum reserve requirement of $518 million, the bank needs to hold an additional:
$518 million - $444 million = $74 million
Since the bank needs to hold this additional reserve over the last 2 days, the amount required per day would be:
$74 million / 2 = $37 million 
Therefore, the bank would need to hold $37 million as reserves over the last two days to meet the minimum reserve requirement. 
Hence, the answer is D) $47.23 million.

If Over the First 12 Days of the Current Reserve