Which of the Following Results in a Net Liquidity Drain

question 2

Multiple Choice

Which of the following results in a net liquidity drain?

• A)Demand deposits increase $100; loans increase $50
• B)Demand deposits decrease $100; loan repayments are $150
• C)Repurchase agreements increase $100; demand deposits decrease $50
• D)Reverse repurchase agreements increase $50; demand deposits decrease $50
• E)none of the options

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Definitions:

Total Asset Turnover

A financial ratio that measures a company's ability to use its assets to generate sales revenue.

Total Assets

Total assets represent the sum of all owned resources with economic value that a company or individual possesses, as recorded on the balance sheet.

Sales

The total revenue a company generates from selling its goods or services.

Debt-to-Equity Ratio

A financial ratio used to measure the relative proportion of shareholders' equity and debt used to finance a company's assets.