The balance sheet above shows the financial situation for the Jamestown National Bank. The central bank has set a required reser
ve ratio of 10%. If the bank does not sell any of its securities, what is the maximum amount of additional loans the bank in Jamestown can undertake? $180,000 $60,000 $40,000 $20,000 $6,000
1 answer:
Answer: $40,000
Explanation:
Hello. Your question was incomplete as it lacked the balance sheet in question. Luckily I found it and have now attached it.
The question states that the central bank has set a required reserve ratio of 10%. This means that 10% of the deposits at the bank are not to be touched so they cannot loan past 90% of the deposits.
The bank has only $60,000 remaining to loan out as they will not sell their securities.
So we will calculate how much they can loan out thus,
= 60,000 - (200,000 * 10%) to find out what amount cannot be touched
= 60,000 - 20,000
= $40,000
The maximum amount of additional loans the bank in Jamestown can undertake is $40,000.
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