Asked by Pablo Porcayo on Jul 22, 2024

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Verified

Which is NOT a legal reserve?

A) Vault cash
B) Government securities
C) Deposits at a Federal Reserve Bank

Legal Reserve

The minimum amount of funds that a bank or financial institution must hold in reserve against deposits, as mandated by regulatory authorities.

Government Securities

Financial instruments issued by the government to finance its expenditures, offering a relatively safe investment.

Vault Cash

Paper currency and coins held by a bank in its vault and used to satisfy demands for withdrawals or to resolve deficits in reserve accounts.

  • Identify and differentiate between types of reserves and securities relevant to the Federal Reserve System.
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Verified Answer

FS
Felicia SmithJul 23, 2024
Final Answer :
B
Explanation :
Government securities can be held by a bank as an investment, but they are not considered a legal reserve. Legal reserves are the assets that a bank must hold in order to meet reserve requirements set by the Federal Reserve. These include vault cash and deposits at a Federal Reserve Bank.