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r-ruslan [8.4K]
3 years ago
7

The average daily net transaction accounts of a local bank during the most recent reserve computation period is $687 million. Th

e amount of average daily reserves at the Fed during the reserve maintenance period is $35.23 million, and the average daily vault cash corresponding to the maintenance period is $12.74 million. Is this bank in compliance with reserve requirements
Business
1 answer:
patriot [66]3 years ago
5 0

Answer:

No, the bank is short on daily reserves by $12.56 million.

Explanation:

The daily average net required would be calculated as follows:

$15.2 million x 0% = 0

($110.2 million - $15.2 million) x 3% = $2.85 million

($687 million - $110.2 million) x 10% = $57.68 million

$2.85 million + $57.68 million = $60.53 million

$60.53 million - $12.74 million = $47.79 million (Daily Average Net Required)

The bank needs to maintain largest average daily reserves for $47.79 million. In this case the bank is maintaining only average reserve of $35.23 million at the Fed. This means that it is short by $12.56 million in order to meet the required reserves.

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