Liquid asset ratio describes:
A)the minimum ratio of liquid assets to total equity set by the central bank.
B)the minimum ratio of liquid assets to total liabilities set by the central bank
C)the minimum ratio of liquid assets to total assets set by the central bank.
D)None of the listed options are correct.

Question

Quizplus · Accepted Answer

Liquid asset ratio describes the minimum ratio of liquid assets to total assets set by the central bank. This ratio is important for financial institutions as it ensures that they have sufficient liquid assets on hand to meet their obligations in case of unexpected events. The central bank sets a minimum ratio to ensure the stability of the financial system.

Liquid Asset Ratio Describes