6
AssignmentMultiple Choice

Managing Liability and Liquidity Risk

Question 6 • AHS Introduction to Careers in Finance

To calculate a bank’s short term liquidity, _____.

Answer
A
divide short term liabilities into total cash or near cash assets
B
subtract short term liabilities from total cash or near cash assets
C
multiply total cash or near cash assets by short term liabilities
D
divide total cash or near cash assets into short term liabilities

Explanation

A bank’s short-term liquidity is measured by comparing its cash and near-cash assets with its short-term liabilities. Divide the total cash or near-cash assets by the short-term liabilities to see how well the bank can cover obligations due soon. This is choice A: divide short-term liabilities into total cash or near-cash assets.

AI-written and checked against the verified answer.

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