Which of the following would a bank generally classify as a short-term investment?
A) Demand deposits
B) Deposits at the Federal Reserve
C) Repurchase agreements
D) Fed Funds purchased
E) Vault cash

Question

Quizplus · Accepted Answer

Repurchase agreements, also known as repos, are generally classified as short-term investments because they are contracts where one party sells securities to another party with the agreement to buy them back at a later date, usually within one day to several weeks. This means that the investment is expected to be held for a short period of time, making it a short-term investment. The other options listed are not typically classified as short-term investments. Demand deposits and vault cash are assets that banks hold to meet daily operating needs, while deposits at the Federal Reserve and Fed Funds purchased are typically used for overnight borrowing and lending between banks.

Which of the Following Would a Bank Generally Classify as a Short-Term