A bank may hold secondary reserves, such as U.S. government securities because:
a. they pay higher interest rates than deposits at the Fed, and are easily converted into cash assets.
b. they pay higher interest rates than deposits at the Fed, even though they are hard to convert assets.
c. they pay lower interest rates than deposits at the Fed, but are more easily converted into cash assets.
d. they pay lower interest rates than deposits at the Fed, and are hard to convert into cash assets.
a
Economics
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