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Suppose the National Commerce Bank has just started its operation with $10 million of Capital. On the first day, it receives total checkable deposits of $90million. The bank makes $30 million commercial loans and as safe investment it buys T-bill for $20 million. If required reserves are 10%,

a) What is the excess reserve of the bank?

b) What does the bank balance sheet look like? (you should draw the T-account as discussed in class)

c) If the T-bills are currently trading at $2500(including commissions) for a face value instrument. How many do they purchase?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91342375

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