1) Banks hold excess and secondary reserves to
A) reduce the interest-rate risk problem.
b. provide for deposit outflows.
c. satisfy margin requirements.
d. achieve higher earnings than they can with loans.
2) Which of the following statements most accurately describes the task of bank asset management?
a. Banks seek the highest returns possible subject to minimizing risk and making adequate provisions for liquidity.
b. Banks seek to have the highest liquidity possible subject to earning a positive rate of return on their operations.
c. Banks seek to prevent bank failure at all cost; since
1) Banks hold excess and secondary reserves to
A) reduce the interest-rate risk problem.
b. provide for deposit outflows.
c. satisfy margin requirements.
d. achieve higher earnings than they can with loans.
2) Which of the following statements most accurately describes the task of bank asset management?
a. Banks seek the highest returns possible subject to minimizing risk and making adequate provisions for liquidity.
b. Banks seek to have the highest liquidity possible subject to earning a positive rate of return on their operations.
c. Banks seek to prevent bank failure at all cost; since a failed bank earns no profit, liquidity needs supersede the desire for profits.
d. Banks seek to acquire funds in the least costly way.
3) The goals of bank asset management include
A) maximizing risk.
b. minimizing liquidity.
c. lending at high interest rates regardless of risk.
d. purchasing securities with high returns and low risk.
