Definition of initial reserve. Meaning of initial reserve. Synonyms of initial reserve
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Definition of initial reserve
initial reserveReserve Re*serve", n.
(a) That part of the assets of a bank or other financial
institution specially kept in cash in a more or less
liquid form as a reasonable provision for meeting all
demands which may be made upon it; specif.:
(b) (Banking) Usually, the uninvested cash kept on hand
for this purpose, called the real reserve. In Great
Britain the ultimate real reserve is the gold kept on
hand in the Bank of England, largely represented by
the notes in hand in its own banking department; and
any balance which a bank has with the Bank of England
is a part of its reserve. In the United States the
reserve of a national bank consists of the amount of
lawful money it holds on hand against deposits, which
is required by law to be not less than 15 per cent
(--U. S. Rev. Stat. secs. 5191, 5192), three fifths of
which the banks not in a reserve city (which see) may
keep deposited as balances in national banks that are
in reserve cities (--U. S. Rev. Stat. sec. 5192).
(c) (Life Insurance) The amount of funds or assets
necessary for a company to have at any given time to
enable it, with interest and premiums paid as they
shall accure, to meet all claims on the insurance then
in force as they would mature according to the
particular mortality table accepted. The reserve is
always reckoned as a liability, and is calculated on
net premiums. It is theoretically the difference
between the present value of the total insurance and
the present value of the future premiums on the
insurance. The reserve, being an amount for which
another company could, theoretically, afford to take
over the insurance, is sometimes called the
reinsurance fund or the
self-insurance fund. For the first year upon any policy the
net premium is called the
initial reserve, and the balance left at the end of the
year including interest is the
terminal reserve. For subsequent years the initial reserve
is the net premium, if any, plus the terminal reserve of
the previous year. The portion of the reserve to be
absorbed from the initial reserve in any year in payment
of losses is sometimes called the
insurance reserve, and the terminal reserve is then called
2. In exhibitions, a distinction which indicates that the
recipient will get a prize if another should be
3. (Calico Printing) A resist.
4. A preparation used on an object being electroplated to fix
the limits of the deposit.
5. See Army organization, above.
Meaning of initial reserve from wikipedia
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