The impact on bank’s balance sheet and lending capacity after making a deposit of $1,000 in bank.

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Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 15, Problem 6SQP

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The impact on bank’s balance sheet and lending capacity after making a deposit of $1,000 in bank.

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Your bank has the following balance sheet: Assets Liabilites Reserves $50 million Checkable Deposits $200 million Securites $50 million Bank Capital $50 million Loans $150 million If the required reserve ratio is 10%, what possible actions can the bank manager take if there is an unexpected deposit outflow of $50 million?

Excess reserves are insurance from deposit outflow. Suppose you hold 15 million required reserves and 45 million excess reserves at the central bank. The total interest payment on reserves from the central bank is 0.3%. If you do not hold your excess reserves at the bank, you may take loans and earn 4% in average. What is the cost of holding excess reserve at the central bank?

You just deposited $4,000 in cash into a checking account at the local bank. Assume that banks lend out all excess reserves and there are no leaks in the banking system. That is, all money lent by banks gets deposited in the banking system. Round your answers to the nearest dollar. If the reserve requirement is 20%, how much will your deposit increase the total value of checkable bank deposits? If the reserve requirement is 8%, how much will your deposit increase the total value of checkable deposits? Increasing the reserve requirement decreases the money supply. %24 %24

Answer 2

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Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 15, Problem 6SQP

To determine

The impact on bank’s balance sheet and lending capacity after making a deposit of $1,000 in bank.

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Answer 3

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Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 15, Problem 6SQP

To determine

The impact on bank’s balance sheet and lending capacity after making a deposit of $1,000 in bank.

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Answer 4

Question

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 15, Problem 6SQP

To determine

The impact on bank’s balance sheet and lending capacity after making a deposit of $1,000 in bank.

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Answer 5

Chapter 15, Problem 6SQP

To determine

The impact on bank’s balance sheet and lending capacity after making a deposit of $1,000 in bank.

Answer 6

Chapter 15, Problem 6SQP

To determine

The impact on bank’s balance sheet and lending capacity after making a deposit of $1,000 in bank.

Answer 7

Chapter 15, Problem 6SQP

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The impact on bank’s balance sheet and lending capacity after making a deposit of $1,000 in bank.

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Answer 11

Ch. 15.3 - Prob. 1YTE Ch. 15 - Prob. 1SQP Ch. 15 - Prob. 2SQP Ch. 15 - Prob. 3SQP Ch. 15 - Prob. 4SQP Ch. 15 - Prob. 5SQP Ch. 15 - Prob. 6SQP Ch. 15 - Prob. 7SQP Ch. 15 - Prob. 8SQP Ch. 15 - Prob. 9SQP

The impact on bank’s balance sheet and lending capacity after making a deposit of $1,000 in bank.

Solution Summary: The author illustrates the impact of 1,000 deposits on the balance sheet and lending capacity of a bank.

The impact on bank’s balance sheet and lending capacity after making a deposit of $1,000 in bank.

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