The Largest Liability Item in the Federal Reserve Banks' Consolidated

question 39

Multiple Choice

The largest liability item in the Federal Reserve Banks' consolidated balance sheet (as illustrated in the book, for April 2013) is:

• A) Treasury deposits
• B) Federal Reserve Notes
• C) Reserves of commercial banks
• D) Loans to commercial banks

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Definitions:

Equity Risk

The risk of loss associated with fluctuations in the stock market or the volatile performance of individual stocks.

Capital Structure Policy

A company's decisions and strategies regarding the mix of its financing sources (debt and equity) to fund its operations and growth.

Financial Risk

The likelihood of financial setbacks in an investment or business initiative.

Interest Tax Shield

Lowering income taxes through the deduction of debt interest payments from taxable earnings.