A bank has currency and coins equal to $20 million in its vaults. It has securities worth $10 million, has borrowings equal to $5 million, and has given out loans equal to $2 million. It also has deposits with the Federal Reserve equal to $4 million. The total reserves of the bank equals
To calculate the total reserves of the bank, we need to understand what reserves are. Reserves refer to the amount of money that a bank holds to fulfill its obligations, maintain liquidity, and meet the regulatory requirements.
Total reserves can be calculated using the following formula:
Total Reserves = Currency + Deposits with the Federal Reserve
From the information given, we know that the bank has currency and coins equal to $20 million and deposits with the Federal Reserve equal to $4 million.
Therefore, we can calculate the total reserves as follows:
Total Reserves = $20 million (currency) + $4 million (deposits with the Federal Reserve)
Total Reserves = $24 million
Therefore, the total reserves of the bank equal $24 million.