How do reserve requirements and securities affect a bank's lending ability?

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Homework Statement



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Homework Equations





The Attempt at a Solution



My guess is 12% of $15000 but that is slightly over $12000. How do the securities and loans play in the calculations?

BiP
 
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A reserve requirement is a percent of cash a bank must keep in relation to its deposits.

For example, if a guy deposits $100, the bank must keep $12, and can loan out the other $88.Securities are assets the bank owns, like shares or bonds. They can be sold like anything else to bring in cash, but the problem explicitly says that they will not sell these.

From this, I think you can solve it if you give it some thought. Give it a try and get back to us.