A depository institution holds 108 million in required reserves and 8 billion in
ID: 1095945 • Letter: A
Question
A depository institution holds 108 million in required reserves and 8 billion in excess reserves. Its remaining assets include 476 million in loans and 146 million in securities. If the institution only liabilities are transactions deposits calculate the required reserve ratio percent? I came up with 17 percent but the answer is 15 %. What did I miss ?A depository institution holds 108 million in required reserves and 8 billion in excess reserves. Its remaining assets include 476 million in loans and 146 million in securities. If the institution only liabilities are transactions deposits calculate the required reserve ratio percent? I came up with 17 percent but the answer is 15 %. What did I miss ?
Explanation / Answer
Deposits = Total assets - 476million - 146 million
Total assets = Total liablities = 8000+108 million
Required reserve ratio = Required reserves.Deposits = 108/(8108-476-146) = 15%