1) Banks hold excess and secondary reserves to

Areduce the interest-rate risk problem.

Bprovide for deposit outflows.

Csatisfy margin requirements.

Dachieve higher earnings than they can with loans.

2) Which of the following statements most accurately describes the task of bank asset management?

ABanks seek the highest returns possible subject to minimizing risk and making adequate provisions for liquidity.

BBanks seek to have the highest liquidity possible subject to earning a positive rate of return on their operations.

CBanks seek to prevent bank failure at all cost; since

1) Banks hold excess and secondary reserves to

Areduce the interest-rate risk problem.

Bprovide for deposit outflows.

Csatisfy margin requirements.

Dachieve higher earnings than they can with loans.

2) Which of the following statements most accurately describes the task of bank asset management?

ABanks seek the highest returns possible subject to minimizing risk and making adequate provisions for liquidity.

BBanks seek to have the highest liquidity possible subject to earning a positive rate of return on their operations.

CBanks seek to prevent bank failure at all cost; since a failed bank earns no profit, liquidity needs supersede the desire for profits.

DBanks seek to acquire funds in the least costly way.

3) The goals of bank asset management include

Amaximizing risk.

Bminimizing liquidity.

Clending at high interest rates regardless of risk.

Dpurchasing securities with high returns and low risk.