Chemistry, asked by seethamahalaksh5123, 10 months ago

The principles of liquidity,safety and profitability are related to

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Answered by shahidatabbassum292
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Answer:

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Answered by TRISHNADEVI
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The principles of Liquidity, Profitablity and Safety are related to Commercial Bank . These are explained below :

 \underline{ \bold{ \red{ \:  \: Principle \:  \:  of  \:  \: Liquidity : \mapsto  \:  \: }}} \\  \\   \:  \:  \:  \:  \:  \:  \:  \:  \:  \:  \:  \: \text{The principle of liquidity is one of the } \\  \text{important principle for the commercial bank. } \\  \text{The term Liquidity refers to the ability of an } \\  \text{asset to convert into cash without loss within } \\  \text{a short time. Therefore, paying the deposited } \\  \text{money on demand of customers of the bank } \\  \text{is called liquidity in the sense of banking.}

 \underline{ \bold{ \red{ \:  \: Principles \:  \:  of \:  \:  Profitability : \mapsto  \: }}} \\  \\   \:  \:  \:  \:  \:  \:  \:  \:  \:  \:  \:  \:  \:  \: \text{Generating profit is one of the primary } \\  \text{objective of a commercial bank. As a } \\  \text{commercial bank is also a  commercial } \\  \text{enterprise, so, it tries to generate profits. For } \\  \text{earning profit, the commercial banks have to } \\  \text{invest in various sides by providing short-term } \\  \text{loans in certain rate of interest. }

 \underline{ \bold{ \red{ \:  \: Principles \:  \:  of  \:  \: Safety \:  : \mapsto \: }}} \\  \\  \:  \:  \:  \:  \:  \:  \:  \:  \:  \:  \:  \text{The principle of Safety of commercial } \\  \text{bank is said to be the principle of investing } \\  \text{in which an investor only purchases securities } \\  \text{when their market price is significantly below } \\  \text{their intrinsic value. A commercial bank } \\  \text{accepts deposits from its customers and then } \\  \text{invests it. But, since the bank is investing the } \\  \text{investor’s money , it keeps the} \\  \text{safety of the money first.}

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