How much can bank b increase its loan making

Assignment Help Econometrics
Reference no: EM131317839

1. Assume that the reserve requirement is 12.5 percent and that $500,000 is added to Hometown Bank's excess reserves as a result of a change in Federal Reserve policy.How much in new loans can Hometown Bank make as a result of this increae in excess reserves?

2. If the entire amount of Hometown's new loans is spent and the funds are deposited in Bank B, by how much can Bank B increase its loan making?

3. What is the maximum amount by which loan making can be increased in the financial depository institutions system as a result of the increase in Hometown Bank's excess reserves?

4. What is the maximum amount in new loans that could be made in the financial depository institutions system following the initial increase in Hometown Bank's excess reserves if the reserve requirement were 20 percent?

Reference no: EM131317839

Questions Cloud

Determining the monthly mortgage payment : You borrow $200,000 to buy a house. The mortgage interest rate is 4.5 percent and the loan period is 30 years. Payments are mademonthly. What is your monthly mortgage payment?
What is the current price of the stock : Ginger Baker, Inc. just paid an annual dividend of $3 a share and this dividend is expected to grow at a rate of 4% per year for the foreseeable future. If the discount rate for Ginger Baker is 9%, what is the current price of the stock?
Computer-based order entry system : Your firm is contemplating the purchase of a new $777,000 computer-based order entry system. The system will be depreciated straight-line to zero over its seven-year life. It will be worth $53,000 at the end of that time. Working capital will revert ..
What is the standard deviation of returns : The common stock of Air United had annual returns of 13.7 percent, 4.8 percent, -6.7 percent, and 27.9 percent over the last four years, respectively. What is the standard deviation of these returns?
How much can bank b increase its loan making : What is the maximum amount in new loans that could be made in the financial depository institutions system following the initial increase in Hometown Bank's excess reserves if the reserve requirement were 20 percent?
Estimate of the company cost of equity : Stock in Country Road Industries has a beta of 1.01. The market risk premium is 9 percent, and T-bills are currently yielding 5.5 percent. The company's most recent dividend was $1.6 per share, and dividends are expected to grow at a 7.5 percent a..
Design a serial 2s complementer with a shift register : Design a serial 2s complementer with a shift register and a flip-flop
What is the company wacc : Filer Manufacturing has 5 million shares of common stock outstanding. The current share price is $84, and the book value per share is $7. Filer Manufacturing also has two bond issues outstanding.
Calculate the long term debt to operating property : Calculate the Operating ratio, Long-term debt to operating property, Operating revenue to operating property for 2011, 2010, and 2009.

Reviews

Write a Review

Econometrics Questions & Answers

  Show this transaction in a t-account for the bank of bonzo

Suppose Fred deposits $8,000 in cash into his checking account at the Bank of Bonzo. The Bank of Bonzo has no excess reserves and is subject to a 5 percent required reserve ratio.

  Create your own scenario and schedule for a 6-month

create your own scenario and schedule for a 6-month or 12-month project. Include the five process groups, but focus on key tasks for executing the project. For example, you could develop a schedule for starting a business, renovating a house, deve..

  What has been the average length of recessions since 1854

What has been the average length of recessions since 1854? Since 1945? What has been the average length of expansions since 1854? Since 1945?

  Which alternative should be selected base on internal return

At the end of their useful lives, both A and B may be purchased with the same cost, benefits, and so forth. If the MARR is 12%, which alternative should be selected based on the internal rate of return using the least common multiple approach

  How much is the typical buyer willing to pay for a used car

Suppose that for every 10 new cars sold by new-car dealers, 9 are plums and only 1 is a lemon. Why is the equilibrium mix in the used car market different from the mix of new cars sold?

  Determine the optimal amount of resources

Harry marries Sally. The marriage contract raises the cost of exiting a relationship, and thus, for any given level of Harry's expenditure, Sally is less likely to dump Harry. Illustrate the effects of the marriage contract in the accompanying gra..

  Determine the breakeven output and total sales revenues

a). Determine the breakeven output and total sales revenues and draw the cost-volume-profit chart, and b). determine the output that would generate a total profit of $60,000 and the total sales revenues at the output level; draw the cost-volume-pr..

  Would you expect an increase or decrease in total revenue

In an attempt to increase revenues and profits, a firm is considering a 4 percent increase in price and an 11 percent increase in advertising. If the price elasticity of demand is 1.5 and the advertising elasticity of demand is +0.6,

  Supply and demand functions for each type of labour

Suppose that the demand for high-skill workers lies everywhere above the demand for low-skill workers. Illustrate on a diagram the supply and demand functions for each type of labour, and the equilibrium for each type of worker.

  How will the expected return on this bond change

What will the bond be worth to an investor who is not too concerned about risk at that time? If the firm appears likely to go bankrupt, how will the expected return on this bond change?

  How will the money supply be affected by the transaction

suppose that Mr Rich withdraws $ 5 Million from his transactions account at the bank of america and holds the money . Assume a reserve requirement of 25 purcent and no excess reserves in the banking system prior to this withdrawal .

  What is the approximate value of the company

An injection molding machine can be purchased and installed for $90,000. It is in the seven-year GDS property class and is expected to be kept in service for 8 years. It is believed that $10,000 can be obtained when the machine is disposed

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