Entire amount of the transaction deposits

Assignment Help Financial Management

Reference no: EM13803346

As of today, the First ECON Bank of Arlington currently holds:

$200M in transaction deposits

$20M in Bank’s capital

$20M in Investment Securities

$160M in Loans

In addition to that, First ECON Bank also holds $40M in Total Bank Reserves.

The bank manager just noticed that one of the UTA students just withdrew $20M out of the checkable (transaction) deposits.

A) If we assume that that entire amount of the transaction deposits is a subject to the legal 10% reserve requirement, please indicate the required course of the bank’s action to manage its liquidity and meet its legal Reserves requirement:

B) Briefly explain how (if at all) would you answer change if the UTA students withdrew $40M?

Reference no: EM13803346

Questions Cloud

What is the future value-simple rate of interest : What is the future value of $12 deposited today in 5 years when earning 6% simple rate of interest?

What is this project’s equivalent annual cost or eac : A five-year project has an initial fixed asset investment of $305,000, an initial NWC investment of $29,000, and an annual OCF of $28,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required ret..

Cash flows over the four-year life of the investment : An investment has an installed cost of $532, 800. The cash flows over the four-year life of the investment are projected to be $216,850, $233,450, $200,110, and $148, 820.

What portion of total assets is financed with dept : Fido's Dog Spa's financial statements show that its total assets equal $100,000, its return on assets is 3% and its return on equity is 5%. Compute the company's net income. What portion of total assets is financed with dept?

Entire amount of the transaction deposits : As of today, the First ECON Bank of Arlington currently holds: If we assume that that entire amount of the transaction deposits is a subject to the legal 10% reserve requirement, please indicate the required course of the bank’s action to manage its ..

Employment contract and accepted the responsibility : Two weeks ago, you signed an employment contract and accepted the responsibility of a Branch Manager with the First Econ Bank in Arlington, TX. Please calculate the actual dollar amount the First ECON Bank has to place aside to meet legal Reserve Req..

Physical inventory-goods costing : Stallman Company took a physical inventory on December 31 and determined that goods costing $220,490 were on hand. Not included in the physical count were $29,100 of goods purchased from Pelzer Corporation, f.o.b. shipping point, and $26,200 of goods..

If a defined benefit pension funds actual rate of return : If a defined benefit pension fund's actual rate of return is _____ than the actuarial assumed rate then the ___________.

What would be the hedge ratio for the option : You would like to be holding a protective put position on the stock of Avalon Corporation to lock in a guaranteed minimum value of $50 at year-end. Avalon currently sells for $50. Over the next year, the stock price will increase by 10% or decrease b..

User Account

All Pages