Suppose a Bank Sells a $1,000 Security to the Bank

Multiple Choice

Suppose a bank sells a $1,000 security to the Bank of Canada and the desired reserve ratio is 20 percent.How much does the bank have in additional excess reserves and how much can it lend out?  

A)  The bank has $1,000 in additional excess reserves, of which it can lend $800. 
B)  The bank has $1,000 in additional excess reserves, all of which it can lend. 
C)  The bank has $200 in excess reserves, all of which it can lend. 
D)  The bank has $200 in excess reserves, of which it can lend $160.