The following net transaction accounts have been documented by a bank for the co
ID: 2649129 • Letter: T
Question
The following net transaction accounts have been documented by a bank for the computation of its reserve requirements (in millions Tuesday Wednesday Thursday Friday Monday Tuesday Wednesday Thursday Friday Monday 11th 12th 13th 14th 17th 18th 19th 20th 21th 24th $250 $280 $260 $280 $300 $270 Net transaction accounts $300 $260 $250 $240 The average daily reserves at the Fed for the 14-day reserve maintenance period have been $22.7 million per day, and the average vault cash for the computation period has been estimated to be $2 million per day. a. What is the amount of the average daily required reserves to be held by the bank during the maintenance period? (Enter your answer in millions rounded to 3 decimal places. (e.g., 32.161)) Average daily required reserves million b. Is the bank in compliance with the requirements? O Yes O NoExplanation / Answer
Solution-a
Average daily demand deposits = $300+$250+$280+$260+$280+$300+$270+$260+$250+$240
Average daily demand deposits = $2,690/10
Average daily demand deposits = $269
Reserve requirement = (6.0 - 0)(0) + (22.7 – 6.0)(0.03) + (269 – 22.7)(0.10)
Reserve requirement = $25.13
Solution-b
Yes
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