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The term ____________________ describes the proportion of deposits that the bank must hold in the form of reserves that are not loaned out or invested in bonds.

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The term reserve ratio describes the proportion of deposits that the bank must hold in the form of reserves that are not loaned out or invested in bonds.

Also referred to as the Cash Reserve Ratio, it's miles the proportion of deposits that commercial banks are required to keep as coins in step with the guidelines of the significant financial institution.

A reserve requirement is an imperative bank law that units the minimal amount that a commercial financial institution should keep in liquid assets.

The requirement for the reserve ratio is determined through the central financial institution of the USA, inclusive of the Federal Reserve inside the case of the US. The calculation for a bank may be derived by means of dividing the cash reserve maintained with the valuable financial institution through the financial institution deposits, and it's far expressed in percent.

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