The average daily net transaction accounts of a local bank during the most recent reserve computation period is $687 million. The amount of average daily reserves at the Fed during the reserve maintenance period is $35.23 million,and the average daily vault cash corresponding to the maintenance period is $12.74 million. What is the average daily reserve balance required to be held by the bank during the maintenance period?

Question

Quizplus · Accepted Answer

The required reserve balance can be calculated as follows:
Required Reserve Balance = (Average Daily Net Transaction Accounts * Reserve Requirement Ratio) - (Average Daily Vault Cash + Average Daily Reserves at the Fed)
Using the reserve requirement ratio of 10% (0.10), we get:
Required Reserve Balance = ($687 million * 0.10) - ($12.74 million + $35.23 million) = $68.7 million - $47.97 million = $20.73 million
Therefore, the average daily reserve balance required to be held by the bank during the maintenance period is $20.73 million.
The closest answer choice to this calculation is B) $47.79 million.

The Average Daily Net Transaction Accounts of a Local Bank