2 Bank loans and other assets Which of the following is the

2. Bank loans and other assets Which of the following is the most liquid of a banks\' assets? O Short-term business loans O Securities O cash O Long-term business loans Use the following categorization table to identify short-term business loans and long-term business loans Short-term business loans Long-term business loans Agricultural loans Leveraged buyouts (LBOs) Securities dealer loans Seasonal loans

Solution

1.

Liquidity of an asset refers, how fast an asset can be converted to cash.

Cash is the most liquid asset.

2.

A short-term loan is those which has maturity period of less than a year, and long-term has maturity period of more than a year.

Short-term business loans

Long-term business loans

Agricultural Loan

Yes

Leveraged Buyouts

Yes

Securities dealer loans

Yes

Seasonal Loans

Yes

	Short-term business loans	Long-term business loans
Agricultural Loan		Yes
Leveraged Buyouts		Yes
Securities dealer loans	Yes
Seasonal Loans	Yes