Fin 100 Week 2 Assignment Answers

Assignment 2Name:Institutional affiliationAs the executive of a bank or thrift institution you are faced withan intense seasonal demand for loans. Assuming that your loanablefunds are inadequate to take care of the demand, how might yourReserve Bank help you with this problem?In the event that a commercial bank cannot raise sufficient reserves through ordinary means, such as encouraging its customers to deposit more money into their accounts, selling its assets or borrowing overnight from other commercial banks, the commercial bank unable to meet its demand for loans may borrow from the Federal Reserve Bank. Borrowing from the FED leads to the reserve account at a Federal Reserve Bank being credited for the amount of the loan (Cstl-hcb.semo.edu, 2016).Banc OneBalance sheetAssume that Banc One receives a primary deposit of $1 million.The bank must keep reserves of 20 percent against its deposits.Prepare a simple balance sheet of assets and liabilities for Banc Oneimmediately after the deposit is received.AssetsReserves 200,000Cash800,000LiabilitiesDeposits1,000,0001,000,0001,000,000Assume a financial system has a monetary base of $25 million.The required reserve ratio is 10 percent, and there are no leakages inthe system.What is the size of