Because of their ________ liquidity, ________ government securities are called secondary reserves.

Question

Quizplus · Accepted Answer

Secondary reserves are highly liquid securities that can be easily and quickly converted to cash. Short-term government securities (such as Treasury bills) are highly liquid and can be easily bought and sold, making them ideal secondary reserves for financial institutions. Long-term government securities, while still liquid, are not as easily converted to cash and therefore not as suitable for secondary reserves. Low liquidity securities are not considered reserves as they cannot provide an immediate backup to cash.

Because of Their ________ Liquidity, ________ Government Securities Are Called

Because of Their Liquidity, Government Securities Are Called