Question: Frost Street National Bank currently holds 750 million in transaction
Frost Street National Bank currently holds $750 million in transaction deposits subject to reserve requirements but has managed to enter into sweep account arrangements with its transaction deposit customers affecting $150 million of their deposits. Given the current legal reserve requirements applying to transaction deposits (as mentioned in this chapter), by how much would Frost Street’s total legal reserves decrease as a result of these new sweep account arrangements, which stipulate that transaction deposit balances covered by the sweep agreements will be moved overnight into savings deposits?
Relevant QuestionsBridgewater Savings Association maintains a clearing account at the Federal Reserve Bank and agrees to keep a minimum balance of $30 million in its clearing account. Over the two-week reserve maintenance period ending today ...A bank determines from an analysis of its cost-accounting figures that for each $500 minimum-balance checking account it sells, account processing and other operating costs will average $4.87 per month and overhead expenses ...Should lifeline banking be offered to low-income customers? Why or why not?R&R Savings Bank finds that its basic transaction account, which requires a $1,000 minimum balance, costs this savings bank an average of $3.25 per month in servicing costs (including labor and computer time) and $1.25 per ...Suppose a customer purchases a $1 million 90-day CD, carrying a promised 6 percent annualized yield. How much in interest income will the customer earn when this 90-day instrument matures? What total volume of funds will be ...
Post your question