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Q.3903 Suppose that a bank has a clearing balance averaging $2.5 million during a certain two-week maintenance period and the Federal funds' interest rate over this same period averaged 8%. Calculate the Federal Reserve credit that it would earn: | Financial Risk Manager Part 2 Quiz - LeetQuiz

Explanation:

Reserve credit = Average clearing balance × Annualized federal funds rate
× $\left(\frac{14 \text{ days}}{360 \text{ days}}\right)$
= $2,500,000 \times 0.08 \times \frac{14}{360} $= `$ 7`,777.8$

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Q.3903 Suppose that a bank has a clearing balance averaging `$2.5` million during a certain two-week maintenance period and the Federal funds' interest rate over this same period averaged 8%. Calculate the Federal Reserve credit that it would earn: