Which of the following is NOT a bank liability? ATransaction accounts offered by the bank BFunds borrowed by the bank CInvestment securities owned by the bank DTime deposits offered by the bank SUBMIT
Question
Which of the following is NOT a bank liability? ATransaction accounts offered by the bank BFunds borrowed by the bank CInvestment securities owned by the bank DTime deposits offered by the bank SUBMIT
Solution
The correct answer is C. Investment securities owned by the bank.
Here's why:
A bank's liabilities are what the bank owes to others.
A. Transaction accounts offered by the bank: These are liabilities because the bank owes the money deposited in these accounts to the account holders.
B. Funds borrowed by the bank: These are liabilities because the bank has to pay back these borrowed funds.
C. Investment securities owned by the bank: These are NOT liabilities. Instead, they are assets. The bank owns these securities, so they represent something of value that the bank holds, not something it owes.
D. Time deposits offered by the bank: These are liabilities because the bank owes the money deposited in these accounts to the account holders.
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