The Immediate Effect of a Bank's Purchase of U

question 60

Multiple Choice

The immediate effect of a bank's purchase of U.S.government securities from the Fed is a(n) :

• A)decrease in the bank's assets.
• B)increase in the bank's assets.
• C)decrease in the Fed's assets.
• D)increase in the Fed's assets.
• E)decrease in both the bank's and the Fed's assets.

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Definitions:

Notes Payable

Short or long-term financial obligations represented by promissory notes that a business owes and has promised to pay by a certain date.

Common Stock

Equity securities that represent ownership shares in a company, providing voting rights and potential dividends to shareholders.

Days' Sales in Inventory

A financial metric indicating the average number of days a company takes to sell its inventory.

Statement of Financial Position

Another term for a balance sheet, which is a financial document that provides a snapshot of an entity’s assets, liabilities, and shareholders' equity at a specific point in time.