the economics of money, banking, and financial markets

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21. 
    

    Secondary reserves are so called because ____.
    A) they can be converted into cash with low transactions costs
    B) they are not easily converted into cash, and are, therefore, of secondary importance to banking
    firms
    C) 50 percent of these assets count toward meeting desired reserves
    D) they rank second to bank vault cash in importance of bank holdings
    Answer: A
    Diff: 3 Type: MC Page Ref: 296
    Skill: Recall
    Objective List: 13.1 Outline a bank's sources and uses of funds

    
    


22. 
    

    Bank's make their profits primarily by issuing ____.
    A) equity
    B) negotiable CDs
    C) loans
    D) notice deposits
    Answer: C
    Diff: 1 Type: MC Page Ref: 297
    Skill: Recall
    Objective List: 13.1 Outline a bank's sources and uses of funds

    
    


23. 
    

    The most important category of assets on a bank's balance sheet is ____.
    A) advances
    B) securities
    C) loans
    D) cash items in the process of collection
    Answer: C
    Diff: 1 Type: MC Page Ref: 297
    Skill: Recall
    Objective List: 13.1 Outline a bank's sources and uses of funds

    
    


24. 
    

    Which of the following are bank assets?
    A) The building owned by the bank
    B) A discount loan
    C) A negotiable CD
    D) A customer's chequing account
    Answer: A
    Diff: 1 Type: MC Page Ref: 297
    Skill: Recall
    Objective List: 13.1 Outline a bank's sources and uses of funds