The Largest Liability on the Balance Sheet of Most Banks

question 150

Multiple Choice

The largest liability on the balance sheet of most banks is its

• A)loans.
• B)holdings of securities.
• C)deposits with the Federal Reserve.
• D)checking account and savings account deposits of its customers.
• E)vault cash.

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Definitions:

Compounded Monthly

Interest calculation method where interest earned is added to the principal so that, from that moment on, the interest that has been added also earns interest.

Equal Contributions

A setup where all participants in a financial arrangement contribute the same amount.

Retirement Plan

A financial strategy designed to provide individuals with income or assets to rely on after they have ceased working, often involving savings, investments, and other financial products.

Compounded Semi-annually

This refers to the practice of applying interest to an existing amount plus any accumulated interest twice yearly.