Banks can improve their liquidity position by restructuring their asset portfolio to contain fewer ____ and more ____.
A)excess reserves; Treasury bills
B)Treasury bonds; corporate bonds
C)loans; Treasury bills
D)None of these are correct.

Question

Quizplus · Accepted Answer

Banks can improve their liquidity by restructuring their asset portfolio to contain fewer loans and more Treasury bills. Loans are less liquid because they cannot be easily converted into cash without a significant loss of value, whereas Treasury bills are highly liquid, government-backed securities that can be quickly and easily converted into cash.

Banks Can Improve Their Liquidity Position by Restructuring Their Asset