How will transaction deposits change if the fed increases

Assignment Help Financial Management

Reference no: EM131051544

In recent years, the Fed has shown a willingness to decrease existing reserve requirements. Suppose that the transaction deposits at bank and other financial institutions total $900 billion and that a reserve requirement of 10 percent applies only to these deposits. Also assume that financial institutions never have excess resrves and all monies that they lend are deposited in transaction accounts. a) by what dollar amount will transactions deposits increase if the Fd reduces the reserve requirement to 8 percent? b) by what percentage will transaction deposits increase if the Fed changes the reserve requirement to 8 percent? c) How will transaction deposits change if the Fed increases the reserve requirement to 12 percent?

Reference no: EM131051544

Questions Cloud

What is the real-world expected payoff : A binary option pays off $500 if a stock price is greater than $60 in three months. The current stock price is $61 and its volatility is 20%. The risk-free rate is 2% and the expected return on the stock is 8%. What is the value of the option? What i..

Restricted domain and range for function : The function C (x) = 25x + 80,000 express the total cost C (x) (in K£) of manufacturing x units of a product. If the maximum number of units which can be produced equals 20,000, state the restricted domain and range for this function

What is the equity multiplier : Use the following information to answer this question. Windswept, Inc. 2010 Income Statement ($ in millions) Net sales $ 10,050 Less: Cost of goods sold 7,700 Less: Depreciation 395 Earnings before interest and taxes $ 1,955 Less: What is the equity ..

Question regarding the code of ethics : By combining the theories and best ethical practice discussed in the coursework to support your case create a revised "Code of Ethics" which would apply to the organization and the desired outcomes. Explain how you would "assess" such a "strategy"..

How will transaction deposits change if the fed increases : In recent years, the Fed has shown a willingness to decrease existing reserve requirements. Suppose that the transaction deposits at bank and other financial institutions total $900 billion and that a reserve requirement of 10 percent applies only to..

Discuss the role of glass that faces : How should windows be treated on each of these facades to minimize summertime solar heat gain?

Discuss the issues the project manager must consider : Discuss the issues the project manager must consider when assigning programming tasks to programmers.

How is it divided between the fund of funds : A fund of funds divides its money between five hedge funds that earn -5%, 1%, 10%, 15% and 20% before fees in a particular year. The fund of funds charges 1 plus 10% and the hedge funds charge 2 plus 20%. The hedge funds' incentive fees are calculate..

Analysis of decision-making process : While analyzing your decision, keep in mind that everything from the interest rates to the price of gasoline is driven by the economy in one way or another.

User Account

All Pages