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max2010maxim [7]
2 years ago
6

If the banking system has demand deposits of $100,000, total reserves equal to $15,000, and a required reserve ratio of 10 perce

nt, the banking system can increase the volume of loans by a maximum of
Business
1 answer:
Dmitriy789 [7]2 years ago
4 0

The banking system can increase the volume of loans by a maximum of $50,000

<h3><u>What are total reserves?</u></h3>
  • A bank's reserves are calculated by multiplying its total deposits by the reserve ratio. For example, if a bank's deposits total $500 million, and the required reserve is 10%, multiply 500 by 0.10. The bank's required minimum reserve is $50 million.
<h3><u>Calculation of total reserves</u></h3>
  • The reserve ratio is the portion of reservable liabilities that commercial banks must hold onto, rather than lend out or invest. This is a requirement determined by the country's central bank, which in the United States is the Federal Reserve. It is also known as the cash reserve ratio.

Total Reserves = Cash in vault + Deposits at Fed.

Required Reserves = RR x Liabilities.

Excess Reserves = Total Reserves - Required Reserves.

Change in Money Supply = initial Excess Reserves x Money Multiplier.

Money Multiplier = 1 / RR.

Therefore banking systems can increase the volume of loans by $50,000

To know more about bank reserves. click the given links.

brainly.com/question/14173699

brainly.com/question/26960248

#SPJ4

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Please see attachment

5 0
3 years ago
The risk-free rate of return is 5.5%, the expected rate of return on the market portfolio is 17%, and the stock of Xyrong Corpor
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1. $12.31

2. -11.96%

Explanation:

a) Calculation to determine the intrinsic value of a share of Xyrong stock

First step is to calculate the Required Return

Using this formula

Required Return = Risk-free Rate + [Beta * (Expected Market Return - Risk-free Rate)]

Let plug in the formula

Required Return= 5.5% + [2.7 * (17% - 5.5%)]

Required Return= 5.5% + 31.05% = 36.55%

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3 years ago
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