Loan Officer Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

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Question: 1 / 415

Assets are classified as liquid or not liquid. Which of the following is NOT considered a liquid asset?

secured borrowed funds

Assets are classified as liquid based on how quickly and easily they can be converted into cash without significantly affecting their value. Liquid assets, like cash equivalents, checking account balances, and certificates of deposit, can be readily accessed or transformed into cash.

Secured borrowed funds are not considered a liquid asset because they represent a liability rather than an asset. These funds involve borrowing secured by collateral, meaning they are not immediately available for use and require repayment. Additionally, they do not have a straightforward conversion into cash; rather, they depend on the asset that was used as collateral being sold or liquidated, which can take time and involve additional costs. Thus, secured borrowed funds fall into the category of non-liquid assets.

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certificates of deposit

checking account balances

cash equivalents

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