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if a bank has 100 000 of checkable deposits a required reserve ratio of 20 percent a 638936

General Principles of Bank Management

1) Which of the following are primary concerns of the bank manager?

A) Maintaining sufficient reserves to minimize the cost to the bank of deposit outflows

B) Extending loans to borrowers who will pay low interest rates, but who are poor credit risks

C) Acquiring funds at a relatively high cost, so that profitable lending opportunities can be realized

D) Maintaining high levels of capital and thus maximizing the returns to the owners.

2) If a bank has $100,000 of checkable deposits, a required reserve ratio of 20 percent, and it holds $40,000 in reserves, then the maximum deposit outflow it can sustain without altering its balance sheet is

A) $30,000.

B) $25,000.

C) $20,000.

D) $10,000.

3) If a bank has $200,000 of checkable deposits, a required reserve ratio of 20 percent, and it holds $80,000 in reserves, then the maximum deposit outflow it can sustain without altering its balance sheet is

A) $50,000.

B) $40,000.

C) $30,000.

D) $25,000.

4) If a bank has $10 million of checkable deposits, a required reserve ratio of 10 percent, and it holds $2 million in reserves, then it will not have enough reserves to support a deposit outflow Of

A) $1.2 million.

B) $1.1 million.

C) $1 million.

D) $900,000.

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