A bank must maintain an average daily balance at the Fed of $600. In the first 2 days of the maintenance period, they maintain a balance of $450, the next three days they maintain a balance of $700, the next two days they maintain a balance of $650, the next three days they maintain a balance of $450 and the next three days they maintain a balance of $650. What does their balance at the Fed have to be on the last day of the maintenance period in order to have a zero cumulative reserve deficit

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Business

Zayden Lane

14 July, 11:52

A bank must maintain an average daily balance at the Fed of $600. In the first 2 days of the maintenance period, they maintain a balance of $450, the next three days they maintain a balance of $700, the next two days they maintain a balance of $650, the next three days they maintain a balance of $450 and the next three days they maintain a balance of $650. What does their balance at the Fed have to be on the last day of the maintenance period in order to have a zero cumulative reserve deficit

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Jacoby Arnold · Answer 1

Balance with Fed on last day to be $ 800

Explanation:

Computation of balance on last day of maintenance period

Balance maintained $ 450 for 2 days $ 900

$ 700 for 3 days $ 2,100

$ 650 for 2 days $ 1,300

$ 450 for 3 days $ 1,350

$ 650 for 3 days $ 1.950

Average of balances maintained

13 days $ 7,600

Average balance maintenance required for 13 + last day)

$ 600 * (13 + 1) 14 days $ 8,400

so the balance with the Fed on the last day has to be

$ 8,400 - $ 7,600 $ 800