What is the bank liability liquidity reserve

Assignment Help Financial Management

Reference no: EM131347256

A bank currently has $50 million in stable deposits against which they want to keep 10% reserves, $100 in vulnerable deposits against which they want to keep 40% reserves, and they have $50 million in "hot money" deposits against which they want to keep 90% reserves. The legal reserves for this bank are 10% of all deposits. What is the bank's liability liquidity reserve? A. $90 million B. $81 million C. $70 million D. $20 million E. None of the options is correct

Reference no: EM131347256

Questions Cloud

Contemplating canceling the agreement : No More Books Corporation has an agreement with Floyd Bank whereby the bank handles $3.6 million in collections a day and requires a $280,000 compensating balance. No More Books is contemplating canceling the agreement and dividing its eastern region..

National bank maintains an average clearing balance : The Hollingsworth National Bank maintains an average clearing balance of $7,000,000 with the Federal Reserve. The Federal Funds rate is currently 5.25 percent. What is the credit the bank will earn over the maintenance period that can be used to offs..

Delays transfer of funds from interest-bearing account : No More Pencils, Inc., disburses checks every two weeks that average $83,000 and take six days to clear. How much interest can the company earn annually if it delays transfer of funds from an interest-bearing account that pays .011 percent per day fo..

What could be the impact if there was error in understanding : What could be the impact if there was an error in understanding? An explanation for how you will remember the components of your topic. Is there an acronym you created? Can you create a quick limerick?

What is the bank liability liquidity reserve : A bank currently has $50 million in stable deposits against which they want to keep 10% reserves, $100 in vulnerable deposits against which they want to keep 40% reserves, and they have $50 million in "hot money" deposits against which they want to k..

Describe the distribution of chargeable hours : STAT1060- Business Decision Making - Estimate the probability of this minimum number of Chargeable hours being achieved. Show your working. Do NOT use the computer to get a more accurate answer.

Discuss about the case given below : IRBs (institutional review boards) came into being in part as a response to pretty egregious violations of human dignity in the name of research (for example th Nazi medical experiments and the Tuskegee syphilis study). The Keystone project is a ..

Bank expected liquidity deficit or surplus over next week : John Camey, the money manager of the First State Bank, has estimated that the bank has a 20 percent chance of a liquidity deficit of $700 million, a 30 percent chance of a liquidity deficit of $200 million, a 30 percent chance of a liquidity surplus ..

Use an annual cash flow analysis : When John purchased his home, he borrowed $200,000 from his bank at 6% interest rate per year to be repaid in 360 equal annual end-of-month payments in 30 years. The new loan would be made equal to the balance due on the old loan plus the $2,000 serv..

User Account

All Pages