1) Secondary reserves are so called because
A) they can be converted into cash with low transactions costs.
B) they are not easily converted into cash, and are, therefore, of secondary importance to banking firms.
C) 50% of these assets count toward meeting required reserves.
D) they rank second to bank vault cash in importance of bank holdings.
2) Banks” asset portfolios include state and local government securities because
A) their interest payments are tax deductible for federal income taxes.
B) banks consider them helpful in attracting accounts of Federal employees.
C) the Federal Reserve requires member banks to buy securities from state and local
governments located within their respective Federal Reserve districts.
D) there is no default risk with state and local government securities.
3) Bank”s make their profits primarily by issuing ________.
A) equity
B) negotiable CDs
C) loans
D) NOW accounts