Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / suppose that amazon bank has $915 million as daily average total in net transaction accounts over 14 days of computation period on which reserve requirments applies
suppose that amazon bank has $915 million as daily average total in net transaction accounts over 14 days of computation period on which reserve requirments applies. His daily vault cash has been $35 million over the computation period In addition the reserve carry forward from prior period is $2.56 million. using above information what will be the maximum reserve requirement?
Answer :
Net transaction accounts = $915m
From the federal reserve website
Exemption amount = $16.9m
Low reserve tranche = $127.5m
Since Net transaction accounts > Low reserve tranche
Amount reserved at 3% = Low reserve tranche - Exemption amount = $127.5m - $16.9m = $110.60m
Amount reserved at 10% = Net transaction accounts - Low reserve tranche= $915m- $127.5m = $787.50m
Gross Reserve Requirement = Amount reserved at 3% * 3% + Amount reserved at 10% * 10%
= $110.60m * 3% + $787.50m* 10%
= $3.32m + $78.75m= $82.07m
Daily Average Vault Cash = $35m
Reserve carry forward from prior period is $2.56m
Maximum reserve requirement = $82.07m - $35m - $2.56m
= $44.51m
