A bank or financial service institution can generally meet reserve requirements using all of the following except:
A)selling liquid investments.
B)borrowing in the fed funds market.
C)drawing on any excess correspondent balances.
D)borrowing in the repo market.
E)selling new shares.

Question

Quizplus · Accepted Answer

Selling new shares is not a viable option for a bank or financial service institution to meet reserve requirements, as they are not equity issuers and cannot sell equity shares to the public. The other options listed, such as selling liquid investments, borrowing in the fed funds market, drawing on excess correspondent balances, and borrowing in the repo market, are all viable methods for meeting reserve requirements.

A Bank or Financial Service Institution Can Generally Meet Reserve