Banks Can Improve Their Liquidity Position by Restructuring Their Asset

question 39

Multiple Choice

Banks can improve their liquidity position by restructuring their asset portfolio to contain fewer ____ and more ____.

• A)excess reserves; Treasury bills
• B)Treasury bonds; corporate bonds
• C)loans; Treasury bills
• D)None of these are correct.

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Definitions:

Equity Investments-AFS

Acronym for Available-for-Sale, equity investments are securities not classified as held-for-trading or held-to-maturity, and can be sold in response to liquidity needs.

Equity Method

An accounting technique used to record investments in other companies where the investor has significant influence but does not have full control.

Fair Value Method

The fair value method is an accounting approach that measures assets and liabilities at estimates of their current market value rather than historical cost.

Historical Cost Method

An accounting technique that values an asset at its original purchase price, without adjustments for inflation or market value changes.