The relative importance of various asset items on a commercial bank's balance sheet reflects a bank's pursuit of which two conflicting goals?
A) Profits and risk
B) Liquidity and profits
C) Assets and liabilities
D) Buying and selling government securities

Question

Quizplus · Accepted Answer

The relative importance of various asset items on a commercial bank's balance sheet reflects the bank's pursuit of both liquidity and profits. Liquidity is important because banks must be able to meet the demands of withdrawing and depositing customers, while profitability is important for the long-term sustainability of the bank. However, these two goals can sometimes conflict, as assets that are highly liquid may not yield as much profit as riskier investments. As a result, banks must carefully balance these two goals when determining their asset mix.

The Relative Importance of Various Asset Items on a Commercial