A business is balance-sheet solvent when it holds market liquidity assets, particularly against short term debt.Question 7Select one:TrueFalse

True or False QuestionThe four categories of assets on most personal balance sheets include liquid assets, personal possessions, investment assets, and net worth.True false question.TrueFalse

A firm's liquidity refers to __.Multiple choice question.its ability to meet its current obligations as they become duethe excess of its cash and accounts receivable over its accounts payable and other accrued liabilitiesthe excess of its total assets over its total liabilitiesthe cash available to pay its current liabilities as they become due

1. Which of the following are reported as assets on a bank's balance sheet? A) borrowings B) reserves C) savings deposits D) bank capital 2. Which of the following bank assets is the most liquid? A) consumer loans B) reserves C) state and local government securities D) U.S. government securities 3. Banks earn profits by selling with attractive combinations of liquidity, risk, and return, and using the proceeds to buy with a different set of characteristics. A) loans; deposits B) securities; deposits C) liabilities; assets D) assets; liabilities 4. When you deposit $50 in currency at Old National Bank A) its assets increase by less than $50 because of reserve requirements. B) its reserves increase by less than $50 because of reserve requirements. C) its liabilities increase by $50. D) its liabilities decrease by $50. 5. When $1 million is deposited at a bank, the required reserve ratio is 20 percent, and the bank chooses not to hold any excess reserves but makes loans instead, then, in the bank's final balance sheet A) the assets at the bank increase by $800,000. B) the liabilities of the bank increase by $1,000,000. C) the liabilities of the bank increase by $800,000. D) reserves increase by $160,000. 6. Which of the following statements are TRUE? A) A bank's assets are its sources of funds. B) A bank's liabilities are its uses of funds. C) A bank's balance sheet shows that total assets equal total liabilities plus equity capital. D) A bank's balance sheet indicates whether or not the bank is profitable. 7. Which of the following statements is FALSE? A) A bank's assets are its uses of funds. B) A bank issues liabilities to acquire funds. C) The bank's assets provide the bank with income. D) Bank capital is recorded as an asset on the bank balance sheet. 8. Because checking accounts are liquid for the depositor than savings accounts, they earn interest rates. A) less; higher B) less; lower C) more; higher D) more; lower 9. Bank reserves include A) deposits at the Fed and short-term treasury securities. B) vault cash and short-term Treasury securities. C) vault cash and deposits at the Fed. D) deposits at other banks and deposits at the Fed. 10. Asset transformation can be described as A) borrowing long and lending short. B) borrowing short and lending long. C) borrowing and lending only for the short term. D) borrowing and lending for the long term.

Multiple Choice QuestionThe balance sheet equation is:Multiple choice question.liquid assets less long-term liabilities equal net worth.liabilities less assets equal net worth.liquid assets less current liabilities equal net worth.total assets less total liabilities equal net worth.

he assets side of the balance sheet liquidity risk can come from the abilityof a bank to sell/securitise assets to raise funding.• This is a market related liquidity risk as a banks’ ability to raise liquidity byselling/ securitising assets depends to a large extent on the state of themarket it is trying to sell/securitise into.• In times of financial stress it may not be possible to sell assets quickly orsecuritise them.• Before the financial crisis of 2007–09 many banks had come to rely uponregular securitisation of mortgage assets to fund to new business. In times offinancial stress it may not be possible to securitise, so banks that hadbecome dependent on securitisation (e.g. Northern Rock in the UK) foundthemselves with a severe illiquidity problem.(4) Liquidity risk3233