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:

Purchase Price

The amount paid to acquire a product or service, or the cost at which something is bought.

Salvage Value

The forecasted worth of an asset upon reaching the end of its utility.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the central bank's discount window.

Depreciable Equipment

Tangible assets used in production or operations that are written off over their useful lives due to wear and tear or obsolescence.