Question 1

18-131 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 maximum reserve?

Accepted Answer

To find the reserves needed for the last two days, calculate the total reserves required for the 14-day period and subtract the reserves already held. If the average daily reserve for 12 days is $37 million, the total for 12 days is $444 million. Assuming the maximum reserve requirement is $580 million (14 days x $41.4286 million per day), the bank needs $136 million more. The closest option is $135.690 million.

Question 2

18-127 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?

Accepted Answer

Let R be the required reserve.
We know that the reserve maintenance period is 14 days, so the total reserve requirement for the period is 14R.
From the given information, we have:
(12 x 37 million + 2R)/14 = R
Multiplying both sides by 14, we get:
12 x 37 million + 2R = 14R
Simplifying the equation, we get:
R = 91.46 million
Therefore, the bank needs to hold $91.46 million as reserves over the last two days to exactly meet the reserve requirement.

Question 3

18-125 What is the gross reserve requirement?

Accepted Answer

The answer of 18-125 What is the gross reserve requirement?
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Question 4

18-129 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?

Accepted Answer

The answer of 18-129 If over the first 12 days...

Question 5

18-128 The minimum reserves that may be maintained toward the next reserve maintenance period,September 23 to October 6,is

Accepted Answer

The answer of 18-128 The minimum reserves that may be...

Question 6

18-126 What is the reserve to be maintained with fed?

Accepted Answer

The reserve to be maintained with the Fed is 10% of the bank's total deposits. The bank has total deposits of $382.47 million, so the reserve to be maintained with the Fed is $38.247 million.

Question 7

18-124 Suppose the minimum balance was lowered from $500 to $300 and she now pays a service charge of 5 cents per check.Note that it costs the bank 10 cents to process each check.What is her annual gross interest return?

Accepted Answer

The annual gross interest return is calculated by considering the interest earned on the minimum balance and subtracting the cost of processing checks. With a lower minimum balance of $300, the interest earned is reduced, and the service charge per check affects the total return.

Question 8

18-123 What is the average return (explicit and implicit)earned by her if the bank pays interest only on the amounts in excess of the required minimum of $500?

Accepted Answer

The answer of 18-123 What is the average return (explicit...

Question 9

18-130 The maximum reserves that will count toward the next reserve maintenance period,September 23 to October 6,is

Accepted Answer

The answer of 18-130 The maximum reserves that will count...

Quiz 18: Liability and Liquidity Management