On the 30^th of September 2020, Dhaka Bank is attempting to determine its liquidity requirements based on the structure of funds approach for the coming month of October 2020. The management has decided to hold 90 percent reserve in liquid assets for each dollar of hot money deposit, 25 percent reserves for vulnerable fund deposits and 10 percent for its holdings of stable funds. Dhaka Bank currently has total loan outstanding of $2,500 million which is expected to experience a growth of 12% in the coming month.

	Hot Money Deposits	Vulnerable Funds	Stable Funds
Demand Deposits	$50m	$40m	$20m
Saving Deposits	$15m	$20m	$30m
Fixed Deposits	$20m	$10m	$80m

Assuming that the reserve requirement is 7 percent on all deposit accounts except fixed deposit accounts, find the amount in liquid reserves to be held by Dhaka Bank in order to meet the liquidity requirements for the month of October.

Answer rating: 100% (QA)

solve of fund Amandat of hold Hot Money Deposits 85 m 90 765 m Valnerable Fun... View the full answer