The Assets Held by a Bank to Fulfill Its Deposit

question 99

Multiple Choice

The assets held by a bank to fulfill its deposit obligations are known as:

• A) Excess reserves.
• B) Bank reserves.
• C) The reserve ratio.
• D) The deposit ratio.

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Definitions:

Line of Credit

A flexible loan from a bank or financial institution, where a borrower can access funds up to a specified limit at any time.

Lockbox System

A service provided by banks to process payments quickly by allowing companies to have their customers send payments to a special post office box.

Disbursement Float

The time lag between when a payment is issued by a payer and when the funds are actually withdrawn from the payer's account.

Receivable Accounts

Balances of money due to a company for goods or services provided that have not yet been paid by customers.