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Cost of compliance of required reserve in dollar

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Reference no: EM132726258

A bank currently has $150,000 in checkable deposits and $15,000 in reserves. The required reserve ratio is 10%. Suppose there is a deposit outflow for $5,000 due to unexpected deposit withdraws.

(i) Does the bank still have enough reserves to meet 10% reserve requirement?

(ii) Assume a fed funds rate of 0.25%. What would be the cost of compliance of required reserve in dollar amount for this bank?

Reference no: EM132726258

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