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Business, 09.07.2019 02:30 cheriebg

[related to solved problem 13.1] suppose that bank of america pays a 4% annual interest rate on checking account balances while having to meet a reserve requirement of 10%. assume that the fed pays bank of america an interest rate of 0.25% on its holdings of reserves and that bank of america can earn 7% on its loans and other investments. how do reserve requirements affect the amount that bank of america can earn on $1,000 in checking account deposits? ignore any costs bank of america incurs on the deposits other than the interest it pays to depositors. the 10% reserve requirement reduces the amount bank of america can earn on $1,000 by $ nothing. (enter your answer rounded to two decimal places.)

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