An analyst gathers the following information about Monument State Bank: • Demand deposits $400 million • Loans and securities $260 million Reserve requirement 10% • The bank has a total of $50 million in cash and deposits with the Federal Reserve. Monument State Bank is in a position to make additional loans of: A. $5 million. B. $10 million. C. $26 million. D. $40 million. Can anyone give me the solution for this one?
B 10M Required is 400M x .10 = 40M Deposits are 50M. That means 10M are excess and available to make additional loans.