A banker must strike a balance in the pursuit of two conﬂicting goals: proﬁts and liquidity. In terms of asset management, this translates into achieving a balance between holding
A) loans and securities on one hand and reserves on the other.
B) loans on one hand and securities on the other.
C) checkable deposits on one hand and securities on the other.
D) checkable deposits on one hand and reserves on the other.

Question

Quizplus · Accepted Answer

Loans and securities are assets that can generate profits for a bank, while reserves are held to ensure liquidity. Balancing these reflects the dual goals of profitability and liquidity in banking.

A Banker Must Strike a Balance in the Pursuit of Two