Which of the Following Bank Assets Would Be Categorized as Secondary

question 2

Multiple Choice

Which of the following bank assets would be categorized as secondary reserves?

• A) U.S. Treasury bills
• B) Cash
• C) Mortgage loans
• D) Deposits at the Federal Reserve

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Definitions:

Derivative Security

A derivative security is a financial instrument whose value is based on the performance of underlying assets, indexes, or other financial instruments.

Financial Asset

A financial asset refers to any asset that is cash, a contractual right to receive cash or another financial asset from another entity, or a contractual right to exchange financial instruments with another entity under conditions that are potentially favorable.

Claim

A demand for something as due, often referring to a right to payment or other benefits.

Interest Rate Collar

A financial derivative strategy used to hedge interest rate movements by setting upper and lower limits on interest payments.