Which of the following statements is not true? A Bank's primary reserves are short-term assets that...

Which of the following statements is not true?

A Bank's primary reserves are short-term assets that can provide the bank with additional liquidity while safely earning some interest income

B Bank liquidity refers to the bank's ability to accommodate deposit withdrawals and loan requests, and pay off other liabilities as they come due

C Higher concentration ratios imply higher correlation among default rates for banks' loan portfolio

D Value at risk（VAR）is a common approach to assessing risk in financial firm's trading accounts

Expert Solution

The statement which is not true is A - Bank's primary reserves are short term assets that can provide the bank with additional liquidity while safely earning some interest income.

Bank's reserve are not short term assets because these needs to be kept by the bank in order to meet unforeseen contingencies and withdrawals. This money cannot be lent to anybody and must be kept by the Bank in its vault or in the central Bank.

jeff jeffy answered 2 years ago

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