Podcast
Play an AI-generated podcast conversation about this lesson
Questions and Answers
What is the primary purpose of liquidity management for a bank?
What is the primary purpose of liquidity management for a bank?
- To maximize profits from loans
- To ensure ability to meet short-term obligations (correct)
- To maintain high levels of excess reserves
- To minimize credit risk exposure
What are the main components of a bank's balance sheet?
What are the main components of a bank's balance sheet?
- Assets and liabilities (correct)
- Cash items and bank capital
- Reserves and securities
- Deposits and loans
How does ample excess reserves affect a bank's response to a deposit outflow?
How does ample excess reserves affect a bank's response to a deposit outflow?
- No changes in other parts of the balance sheet are necessitated (correct)
- It leads to an immediate decrease in loans to compensate
- It prompts the sale of securities to cover the outflow
- It requires an increase in bank capital to maintain stability
What is the purpose of bank capital?
What is the purpose of bank capital?
Signup and view all the answers
In the context of banking, what does asset management primarily involve?
In the context of banking, what does asset management primarily involve?
Signup and view all the answers
