An analyst gathers the info about Ans Bank: demand deposits: $400 mil loans and securities: $260 mil Reserve Requirements: 10% The bank hs a total of $50 mil in cash and deposits with federal reserve. Ans bank is in a position to make additional loan of: A. 5 mil B. 10 mil C.26 mil D. 40 mil Ans: B. How did you get this answer? Thanks~!
400 Mill * .1 = 40 Mill amount of reserve 50 -40 = 10
got it! thanks!