Which statement best describes a bank's liquidity?
Correct answer: A. Its ability to meet short-term obligations
- A. Its ability to meet short-term obligations
- B. Its ability to earn the highest profit
- C. Its total ownership of fixed assets
- D. Its long-term increase in share capital
Explanation
Liquidity refers to the ability to meet near-term payments and withdrawals without unacceptable loss. Profitability and capital growth are different financial concepts, although they can affect a bank's overall strength.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Finance and Banking Basics
Business finance covers capital requirements, sources of funds, budgeting, cash flow, investment decisions and basic financial statements and ratios. Banking includes commercial bank functions, deposits, loans, credit creation, interest and the role of a central bank, including its monetary policy and regulatory functions.
Practise Finance and Banking Basics
30 free Finance and Banking Basics MCQs from Introduction to Business, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Introduction to Business questions like this
Introduction to Business is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
More Finance and Banking Basics questions
Open market operations by a central bank mainly involve the purchase and sale of:
Which feature most clearly distinguishes a demand deposit from a fixed-term deposit?
A business has current assets of Rs. 240,000 and current liabilities of Rs. 120,000. What is its current ratio?
Compared with a bondholder, an ordinary shareholder generally has:
In the accounting equation, total assets are equal to:
A banker's acceptance is best described as: