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From course:

Economics A Level (DONEEEEEEE)

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Question:

What do Banks do when thinking about Maximising Profits and Balancing their Assets on Liquidity?

Author: eric_galvao



Answer:

-Banks want Profit to Benefit their Shareholders -The Rate of Return on Illiquid Assets is Greater than Liquid Assets. However, Banks need a Certain Amount of Liquid Assets present to Repay Depositors, but not too much in case they become Unprofitable. Liquid Reserves must be Right


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