Liquidity refers to:
A. A company’s cash availability
B. A company’s amount of financial leverage
C. A company’s ability to meet its debt obligations
D. A company’s ability to generate sales from use of its assets
E. A company’s operating cycle
Ans: E. A company’s operating cycle
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One reason why a monopolist might be able to provide greater output at lower costs than other market structures is that some monopolists
a. earn exceptional profit which allows them to lower price and costs b. produce high volume output which allows them to capture economies of scale so that their ATCs are lower c. have high market share which allows them to raise price and lower cost at the same time d. exploit their labor force by offering low wage rates so that costs are lower e. do not advertise, thereby reducing costs
Answer the following statements true (T) or false (F)
1. When a bank accepts additional deposits, its required reserves and excess reserves will both increase. 2. When a bank grants a loan, the money supply M1 will increase, even if the funds from the loan are not spent. 3. The primary purpose of the reserve requirements for banks is not really to ensure liquidity to meet withdrawals, but rather to allow the Fed some control over the money supply. 4. The granting of a $10,000 loan and the purchase of a $10,000 government bond from a securities dealer by a commercial bank would have the same effect on the money supply. 5. A bank can grant loans up to the amount of its actual reserves.