Banking Practice Showdown 2025 – Vault into Your Future Success!

Question: 1 / 400

Which of the following bank assets is the most liquid?

Long-term investments

Short-term investments

Loans

Demand deposits

Demand deposits are considered the most liquid bank assets because they can be easily and quickly converted into cash without any penalties or significant delays. Demand deposits, which include checking accounts, allow account holders to withdraw funds on demand, making them readily available for transactions. This high level of accessibility and immediate usability defines liquidity in banking.

In contrast, long-term investments and loans typically have longer durations before they can be liquidated and often come with penalties or restrictions. Short-term investments, while more liquid than long-term ones, may still require some time or transactional procedures to access cash. Therefore, demand deposits stand out due to their immediate availability, making them the most liquid asset among the options presented.

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