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Questions and Answers
Questions and Answers
What are the three most important guiding principles of asset distribution for a bank mentioned in the text?
What are the three most important guiding principles of asset distribution for a bank mentioned in the text?
- Safety, stability, liquidity
- Liquidity, profitability, security (correct)
- Profitability, liquidity, stability
- Security, profitability, liquidity
Which item on the assets side is considered the 'first line of defense' for a bank?
Which item on the assets side is considered the 'first line of defense' for a bank?
- Money at Call and Short Notice
- Cash on hand in vaults (correct)
- Money kept with central bank
- Loans to brokers in the stock market
What is the purpose of keeping money at Call and Short Notice according to the text?
What is the purpose of keeping money at Call and Short Notice according to the text?
- To maintain liquidity (correct)
- To meet depositor obligations
- To earn interest from long-term loans
- To secure long-term investments
How are items on the assets side distributed in terms of liquidity and profitability?
How are items on the assets side distributed in terms of liquidity and profitability?
Where does the bank keep some money apart from cash on hand as a backup?
Where does the bank keep some money apart from cash on hand as a backup?
What is the dual nature of bills in hand for a bank according to the text?
What is the dual nature of bills in hand for a bank according to the text?
Why is bank capital important for protecting depositors according to the text?
Why is bank capital important for protecting depositors according to the text?
Which type of capital account is designed to cover unanticipated losses on loans and investments?
Which type of capital account is designed to cover unanticipated losses on loans and investments?
How are reserve accounts different from cash reserves for banks?
How are reserve accounts different from cash reserves for banks?
According to Crowther, what do assets represent on a bank's balance sheet?
According to Crowther, what do assets represent on a bank's balance sheet?
Why are bills in hand shown on both sides of the balance sheet?
Why are bills in hand shown on both sides of the balance sheet?
Questions and Answers
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Flashcards
Flashcards
Bank Asset Distribution Principles
Bank Asset Distribution Principles
Liquidity, profitability, and security are the core guiding principles for distributing a bank's assets.
Bank's First Line of Defense
Bank's First Line of Defense
Cash on hand in vaults is the most liquid asset, serving as the first line of defense for a bank.
Call and Short Notice Money Purpose
Call and Short Notice Money Purpose
Keeping money in Call and Short Notice accounts ensures the bank maintains liquidity.
Asset Distribution Order
Asset Distribution Order
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Bank Cash Backup
Bank Cash Backup
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Bills in Hand Dual Nature
Bills in Hand Dual Nature
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Bank Capital's Role
Bank Capital's Role
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Special Reserve Account Purpose
Special Reserve Account Purpose
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Reserve Accounts vs. Cash Reserves
Reserve Accounts vs. Cash Reserves
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Crowther's View of Assets
Crowther's View of Assets
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Bills in Hand Balance Sheet Position
Bills in Hand Balance Sheet Position
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