A Bank Currently Holds $105 Million in Transaction Deposits Subject

Multiple Choice

A bank currently holds $105 million in transaction deposits subject to legal reserves but has managed to enter into sweep account arrangements affecting $55 million of these accounts.Given that the bank must hold 3 percent legal reserves up to $47.8 million of transaction deposits and 10 percent legal reserves on any amount above that,how much has this bank reduced its total legal reserves as a result of these sweep arrangements?

A) $5.500 million
B) $1.449 million
C) $7.119 million
D) $1.619 million
E) None of the options is correct