Which of the Following Results in a Net Liquidity Drain

question 37

Multiple Choice

Which of the following results in a net liquidity drain?

• A) Demand deposits increase $100; loans increase $50
• B) Demand deposits decrease $100; loan repayments are $150
• C) Repurchase agreements increase $100; demand deposits decrease $50
• D) Reverse repurchase agreements increase $50; demand deposits decrease $50
• E) None of the above

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Definitions:

Estimated Warranty Costs

The projected expenses a company expects to incur for repairing or replacing products under warranty.

Warranty Contracts

Agreements that guarantee the repair or replacement of a product within a specified time period if it fails to meet outlined conditions.

Contingent Liability

A potential obligation that may arise in the future, dependent on the occurrence of a specific event.

Financial Statement

Documents that provide an overview of a company's financial condition, including balance sheets, income statements, and cash flow statements.