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What does the term 'liquidity' refer to in banking?
Practice Questions
Q1
What does the term 'liquidity' refer to in banking?
The ability to convert assets into cash
The amount of cash reserves held by a bank
The interest rate on loans
The total deposits in a bank
Questions & Step-by-Step Solutions
What does the term 'liquidity' refer to in banking?
Steps
Concepts
Step 1: Understand that liquidity is about cash.
Step 2: Know that liquidity means how easily you can get cash from your assets.
Step 3: Realize that assets can be things like stocks, bonds, or property.
Step 4: Remember that good liquidity means you can sell these assets quickly.
Step 5: Understand that selling quickly should not cause a big loss in value.
No concepts available.
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