A bank's core deposits are:
A) vault cash.
B) stable deposits that are not typically withdrawn over short periods of time.
C) the bank's deposits at the Federal Reserve.
D) the most interest rate sensitive liabilities of a bank.
E) deposits held in foreign offices.

Question

Quizplus · Accepted Answer

Core deposits refer to stable deposits that are not typically withdrawn over short periods of time, such as savings accounts and checking accounts. These deposits are an important source of funds for banks to use for lending and investment activities. Other options such as vault cash, deposits at the Federal Reserve, and foreign office deposits do not fall under the definition of core deposits. Option D may be partially correct as core deposits can be considered a type of funding that is less interest rate sensitive compared to other types of liabilities such as certificates of deposit (CDs).

A Bank's Core Deposits Are