Buffer Reserves at DIs Are

question 21

Multiple Choice

Buffer reserves at DIs are

• A)reserves in excess of the minimum required reserves.
• B)government securities that do not qualify as required reserves, but that can be converted to cash quickly.
• C)the portion of reserves that are calculated at a rate of ten percent of deposits.
• D)non-government securities and loans that must be converted into cash.
• E)the portion of life insurance company assets that require minimum reserves.

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Definitions:

Significant Influence

Control exerted by an investor over a subsidiary or associate, typically through ownership of a substantial portion of voting stock, allowing the investor to affect financial and operating policies.

Equity Method

An accounting technique used by a company to record investments in other companies where it has significant influence but does not have full control.

Consolidated Financial Statements

Financial statements that combine the financial information of a parent company with its subsidiaries to present a single set of statements for the entire group.

FVTPL

Fair Value Through Profit or Loss, an accounting strategy whereby financial assets are valued at their current market price, with changes in fair value recorded in the profit or loss statement.