A Bank Maintains an Average Clearing Balance of $1,000,000 with the Federal

Multiple Choice

A bank maintains an average clearing balance of $1,000,000 with the Federal Reserve.The Federal funds rate is currently 4.5 percent.What amount of credit will the bank earn over the reserve maintenance period that can be used to offset any fees charged by the Federal Reserve?

A) $17,500
B) $1,750
C) $45,000
D) $12,500
E) None of the options is correct