81. For reserve calculation purposes, the period that begins on a Thursday and ends on a Wednesday 14 days
later is known as
82. Under the lagged reserve accounting system, the
83. Under contemporaneous reserve accounting the
84. Which of the following observations is true of the contemporaneous reserve accounting system?
85. The weekend game is
86. One method that may be employed by banks to lower required reserves is to
87. Another method that may be employed by banks to lower required reserves is to
88. Which of the following is the result of using “sweep accounts” in which high reserve ratio demand deposits
are “swept” out of customers’ accounts on Friday into higher interest-bearing savings accounts?
89. The minimum daily average reserve requirement is computed by
90. For reserve computation purposes, Friday balances
91. The Federal Reserve allows the DI to make up to a _____ daily average error without penalty.
92. In October 2008, the opportunity cost of holding excess reserves for U.S. DIs
93. Demand deposits
94. Which of the following liabilities have a high degree of withdrawal risk?
95. What is the average implicit interest rate on a $100,000 account if the bank’s average management costs are
$2,500 and annual fees average $1,750?
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97. A DI offers a $500 minimum balance NOW account paying 5.5 percent annual interest. The account has a
service charge of $0.05 per check, and processing costs per check are $0.15. The customer maintains a balance
of $1,000, and averages 150 checks per year. What is the annual gross interest return on this account to the
customer?
98. What is the major distinction between NOW accounts and traditional demand deposits?
99. Which of the following rankings of liabilities is correct if they are ranked by withdrawal risk from riskiest to
least risky?
100. Which of the following is a mechanism used by DI managers to reduce demand deposit withdrawal rates?
101. Which of the following is a mechanism used by DI managers to impact withdrawal rates of NOW
accounts?
102. Why are passbook savings generally less liquid than demand deposits and NOW accounts?
103. Wholesale certificates of deposit
104. Since 1998, interest rate variability in the fed funds market has decreased because
105. Which of the following observations concerning the federal funds rate is NOT true?
106. Which of the following observations concerning repurchase agreements is NOT true?
107. Which of the following rankings of liabilities is correct if they are ranked by funding costs from lowest
cost to highest cost?
108. In situations where the required reserve shortfall exceeds 4 percent, the bank may be
109. Which of the following liability products does NOT include transaction privileges?
110. Which of the following liability products does NOT have withdrawal risk?
111. The largest dollar volume of money market securities is
112. Over the past 30 years in the DI industry
113. Medium term notes issued by a U.S. DI
114. What are the average daily demand deposit balances over the reserve computation period beginning the
week of June 12?
115. What is the average daily reserve required to be held by the bank for their demand deposits during the
maintenance period? Suppose that the rules require no reserves for the first $5.5 million, 3 percent for amounts
between $5.5 million and $42.8 million, and 10 percent thereafter.
116. Is the bank in compliance with the requirements?
117. What is the average return earned (both explicit and implicit) by the account holder over the full year?
118. What is the average return earned (both explicit and implicit) by the account holder over the full year if the
minimum balance is reduced to $200?
119. What is the average return (both explicit and implicit) earned by the account holder if the bank pays
interest on only the amounts in excess of the required minimum of $200?
120. The bank would like to limit the average return (both explicit and implicit) earned by the account holder to
5 percent per year. How much should it charge for processing each check to this account holder assuming that it
will pay annual interest of 5 percent and minimum balances of $200 are maintained?
121. What is Michelle’s annual gross interest return?
122. What is the average return earned (explicit and implicit) by her over the year?
123. What is the average return (explicit and implicit) earned by her if the bank pays interest only on the
amounts in excess of the required minimum of $500?
124. Suppose the minimum balance was lowered from $500 to $300 and she now pays a service charge of 5
cents per check. Note that it costs the bank 10 cents to process each check. What is her annual gross interest
return?
125. What is the gross reserve requirement?
126. What is the reserve to be maintained with fed?
127. If over the first 12 days of the current reserve maintenance period the average daily reserve held were $37
million, what does the bank need to hold as reserves over the last two days to exactly meet the reserve
requirement?
128. The minimum reserves that may be maintained toward the next reserve maintenance period, September 23
to October 6, is
129. If over the first 12 days of the current reserve maintenance period the average daily reserve held were $37
million, what does the bank need to hold as reserves over the last two days to meet the minimum reserve?
130. The maximum reserves that will count toward the next reserve maintenance period, September 23 to
October 6, is
131. If over the first 12 days of the current reserve maintenance period the average daily reserve held were $37
million, what does the bank need to hold as reserves over the last two days to meet the maximum reserve?