Part of a bank's liquidity management is to hold a portfolio of:

Question

Quizplus · Accepted Answer

Commonwealth government securities are considered highly liquid assets and are often used by banks as part of their liquidity management strategy. These securities can be easily sold or used as collateral in funding operations, making them a reliable source of liquidity for banks.

Option A, term loans, are not typically considered highly liquid as they cannot be easily sold or used as collateral. Option B, mortgages, may be relatively liquid but are subject to changes in the housing market and may be difficult to sell quickly in adverse market conditions. Option D, credit card loans, may be subject to higher risk and volatility compared to government securities, making them a less reliable source of liquidity for banks.

Part of a Bank's Liquidity Management Is to Hold a Portfolio