Suppose the National Commerce Bank has just started its operation with $10 million of Capital. On the first day, it receives total checkable deposits of $90million. The bank makes $30 million commercial loans and as safe investment it buys T-bill for $20 million. If required reserves are 10%,
a) What is the excess reserve of the bank?
b) What does the bank balance sheet look like? (you should draw the T-account as discussed in class)
c) If the T-bills are currently trading at $2500(including commissions) for a face value instrument. How many do they purchase?