When the Fed Sells U

question 109

Multiple Choice

When the Fed sells U.S.government securities to a member bank,the immediate effect on that bank's balance sheet is a(n) :

• A)decrease in assets and an increase in liabilities.
• B)increase in assets and a decrease in liabilities.
• C)increase in both assets and liabilities.
• D)decrease in both assets and liabilities.
• E)change in the type of assets the bank is holding,but no change in liabilities.

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Definitions:

Journal Entries

The recordation of financial transactions in a company’s accounting system that involves at least one debit and one credit entry.

Net Profit Margin

A financial ratio that shows the percentage of profit a company generates from its revenues.

Operating Income

Earnings before interest and taxes, representing the profit generated from a company's core business operations.

Net Income

The profit a company generates after all expenses, taxes, and costs have been subtracted from total revenue, indicating financial health.