How many reserves in total did the commercial bank need

Assignment Help Accounting Basics
Reference no: EM133019157

Question - Assume that MCB Bank gives a loan to a customer at an amount of RS 175,000 And credits it to the demand deposit of the customer. The customer withdraws 20 percent of it in the form of cash. Additionally there is a reserve requirement of 10 percent for demand Deposits set by the central bank. Answer the following questions.

1. How many reserves in total did the commercial bank need for this loan?

2. Show how the balance sheet of the MCB bank and the customer are affected by the loan and the cash withdrawal if we assume that the MCB bank already has a sufficient amount of cash, which it has received previously from the central bank.

3. Why is a commercial bank normally interested to have as many customers as possible putting their money at accounts of this bank, although it does not need these accounts for giving loans?

Reference no: EM133019157

Questions Cloud

Calculate the expected dividend payout amount : A company follows a strict residual dividend policy. It has a capital budget of $3,000,000. Calculate the expected dividend payout amount
Prepare the entry to record the adjusting entry at December : Prepare the entry to record the adjusting entry at December 31, 2021, to record the revenue to be recognized in December 2021
Calculate the weighted average cost of capital : The company has a target D / E of 1.9, a risk premium for the cost of equity of 5%. Calculate the weighted average cost of capital
Strategic elements of product development : QUESTION ONE"The strategic elements of product development provide a framework to guide management through product development and help them focus on what is im
How many reserves in total did the commercial bank need : Assume that MCB Bank gives a loan to a customer at an amount of RS 175,000. How many reserves in total did the commercial bank need for this loan
Calculate the weighted average cost of capital : Ayoba Limited uses a combination of shares and debt in their capital structure. There are 4 million R1 ordinary shares in issue and the current market price is
After-tax cash flows and the net present value of cash : 1. What is the after-tax cash flows and the net present value of the cash outflows under each alternative?
What is the price earnings ratio of the company : -What is the price earnings ratio (PE) of the company, given total number of outstanding ordinary shares is 57,000 and market price of each share is $22
What amount should be reported as the gain : On the company's December 31, year 4 income statement, what amount should be reported as the gain on reversal of impairment loss

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd