What is the purpose of a cash reserve policy?Options :a) To minimize liquidity riskb) To maximize investment returnsc) To reduce the need for short-term borrowingd) All of the above

Why does cash reserves typically account for a small proportion of a bank's assets? A bank makes higher returns by holding more liquid assets such as loans. It is expensive to keep too much cash in highly secured vaults. Cash reserves are very liquid, and it is risky for banks to have too much liquidity. Cash reserves are held in vaults and therefore not electronically transferrable between banks. A bank makes higher returns by holding riskier assets such as loans.

Cash-value policies are good for people who must be forced to save and for those who plan to keep the policy for a(n) period of time

Reserves of cash kept with itself by a bank to meet its payment requirements is called

Explain one purpose of preparing a cash budget. [2]

cash-value life insurance policy provides both insurance and a savings account.