Which of the Following Statements Most Accurately Describes the Task

question 17

Multiple Choice

Which of the following statements most accurately describes the task of bank asset management?

• A)Banks seek the highest returns possible subject to minimizing risk and making adequate provisions for liquidity.
• B)Banks seek to have the highest liquidity possible subject to earning a positive rate of return on their operations.
• C)Banks seek to prevent bank failure at all cost;since a failed bank earns no profit,liquidity needs supersede the desire for profits.
• D)Banks seek to acquire funds in the least costly way.

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Definitions:

Net Income

The amount of money remaining after all operating expenses, taxes, and interest have been deducted from total revenue.

Sales

The process of exchanging a product or service for monetary value, typically in a business setting.

Return on Equity

A financial ratio that measures the profitability of a corporation in relation to stockholders’ equity, indicating how well a company uses investment funds to generate earnings growth.

Sales

The activity or business of selling products or services.