Which of the following would be considered a secondary reserve for a bank?
A)cash the bank has on hand
B)securities the bank has purchased from the federal government
C) deposits that may be due from other banks
D) the reserve percentage required by the Federal Reserve System

Question

Quizplus · Accepted Answer

A secondary reserve for a bank is an asset that can be easily converted into cash if needed to meet demand for withdrawals. Securities purchased from the federal government can be sold quickly and easily in the open market, making them a secondary reserve. Choice A is considered the primary reserve for a bank since it is the actual cash on hand. Choice C represents assets that may or may not be easily converted to cash, and therefore cannot be relied upon as a secondary reserve. Choice D represents the reserve requirement set by the Federal Reserve System, which does not count as a secondary reserve for the bank.

Which of the Following Would Be Considered a Secondary Reserve