Question

Sweetbriar Savings Association maintains a clearing account at the Federal Reserve bank and agrees to keep a minimum balance of $45 million in its clearing account. Over the two-week reserve maintenance period ending today Sweetbriar managed to keep an average clearing account balance of $49 million. If the Federal funds interest rate has averaged 1.95 percent over this particular maintenance period, what maximum amount would Sweetbriar have available in the form of Federal Reserve credit to help offset any fees the Federal Reserve might charge this association for using Federal Reserve services?

Answer 1

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