The legal reserves for this bank are 10 of all deposits


1. A bank currently has $50 million in stable deposits against which they want to keep 10% reserves, $100 in vulnerable deposits against which they want to keep 40% reserves, and they have $50 million in "hot money" deposits against which they want to keep 90% reserves. The legal reserves for this bank are 10% of all deposits. What is the bank's liability liquidity reserve?  

A. $90 million

B. $81 million

C. $70 million

D. $20 million

E. None of the options is correct

2. A bank currently has $150 million in "hot money" deposits against which it wants to hold an 80 percent reserve and $90 million in vulnerable deposits against which it wants to hold a 30 percent reserve. It also has $45 million in stable deposits against which it wants to hold a 5 percent reserve. Legal reserves for the bank are 5 percent of all deposits. What is the bank's liability liquidity reserve?  

A. $149.25 million

B. $285 million

C. $141.7875 million

D. $216.60 million

E. None of the options is correct

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Financial Management: The legal reserves for this bank are 10 of all deposits
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