The Taylor Treadwell Bank has just calculated the ratio of its net loans and leases to total assets.Which liquidity indicator is this?
A)Cash position indicator
B)Liquid securities indicator
C)Net federal funds and repurchase agreement position
D)Capacity ratio
E)None of the options is correct

Question

Quizplus · Accepted Answer

The ratio of net loans and leases to total assets is a capacity ratio, which measures the ability of the bank to generate income from its assets. It is a liquidity indicator in the sense that it shows the ability of the bank to meet its obligations as they fall due, but it is not classified specifically as a cash position or liquid securities indicator. Option C is incorrect as it refers to a different liquidity measure that focuses on the availability of funds in the interbank market. Option E is also incorrect as the question explicitly mentions a liquidity measure, so it cannot be that none of the options is correct.

The Taylor Treadwell Bank Has Just Calculated the Ratio of Its