Which of the Following Is False

question 49

Multiple Choice

Which of the following is false?

• A)While banks must meet their reserve requirements, they do not want to keep any more of their funds as additional reserves than necessary for safety, because cash assets do not earn any interest.
• B)The combination of the Federal Deposit Insurance Corporation (FDIC) and the government's greater willingness to assist distressed banks has largely eliminated bank runs.
• C)Banks earn interest on reserve account with the Federal Reserve, but not on cash on hand.
• D)None of the above is false.

---

Definitions:

Stockholders' Equity

Represents the residual interest in the assets of a corporation after deducting liabilities. It typically includes common stock, preferred stock, retained earnings, and treasury stock.

Balance Sheet

A report detailing a corporation's assets, liabilities, and equity of its shareholders at a certain moment.

Liquidity Problems

Situations where an entity faces difficulty in converting assets into cash or meeting its short-term obligations.