Holdings of government bonds are classified on a bank's balance sheet asGroup of answer choicesliabilities, because the bank must borrow in order to be able to invest in the government bonds.assets, because the markets for government bonds are the most liquid in the world.liabilities, because the government bonds must be pledged as collateral against borrowing.assets, because investing in government bonds represents a use of funds for investment.

Which of the following about bank lending to government is incorrect?  Question 2Select one:Government securities enable a bank to manage the maturity structure of its balance sheet.Banks invest in government securities because they are a source of liquidityBanks invest in T-notes because they provide short-term income streams.Securities issued by governments are usually regarded as low risk.

Fill in the Blank QuestionFill in the blank question.Government bonds are considered a(n) safety, risk, investment.

1. Which of the following are reported as assets on a bank's balance sheet? A) borrowings B) reserves C) savings deposits D) bank capital 2. Which of the following bank assets is the most liquid? A) consumer loans B) reserves C) state and local government securities D) U.S. government securities 3. Banks earn profits by selling with attractive combinations of liquidity, risk, and return, and using the proceeds to buy with a different set of characteristics. A) loans; deposits B) securities; deposits C) liabilities; assets D) assets; liabilities 4. When you deposit $50 in currency at Old National Bank A) its assets increase by less than $50 because of reserve requirements. B) its reserves increase by less than $50 because of reserve requirements. C) its liabilities increase by $50. D) its liabilities decrease by $50. 5. When $1 million is deposited at a bank, the required reserve ratio is 20 percent, and the bank chooses not to hold any excess reserves but makes loans instead, then, in the bank's final balance sheet A) the assets at the bank increase by $800,000. B) the liabilities of the bank increase by $1,000,000. C) the liabilities of the bank increase by $800,000. D) reserves increase by $160,000. 6. Which of the following statements are TRUE? A) A bank's assets are its sources of funds. B) A bank's liabilities are its uses of funds. C) A bank's balance sheet shows that total assets equal total liabilities plus equity capital. D) A bank's balance sheet indicates whether or not the bank is profitable. 7. Which of the following statements is FALSE? A) A bank's assets are its uses of funds. B) A bank issues liabilities to acquire funds. C) The bank's assets provide the bank with income. D) Bank capital is recorded as an asset on the bank balance sheet. 8. Because checking accounts are liquid for the depositor than savings accounts, they earn interest rates. A) less; higher B) less; lower C) more; higher D) more; lower 9. Bank reserves include A) deposits at the Fed and short-term treasury securities. B) vault cash and short-term Treasury securities. C) vault cash and deposits at the Fed. D) deposits at other banks and deposits at the Fed. 10. Asset transformation can be described as A) borrowing long and lending short. B) borrowing short and lending long. C) borrowing and lending only for the short term. D) borrowing and lending for the long term.

Bonds are:  A. Short-term debt securities  B. Long-term debt securities  C. Equity investments  D. Physical assets

Which of the following bank assets is the most liquid?A) consumer loansB) reservesC) state and local government securitiesD) U.S. government securities