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"Bank managers should always seek the highest return possible on bank's assets." Is this statement true,...

"Bank managers should always seek the highest return possible on bank's assets." Is this statement true, false or uncertain? Explain your answer in details.

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Answer #1

The given statement is false

If a bank has an asset which is having a lot of risk, then bank will not hold such assets even if it has a higher return compared to other assets.

Today Banking is one of the most popular industries and it is having more active liability management system.   For every bank, holding of riskless assets is the first priority for its sustainability in the market.

banks have to operate in such a way that, following varios norms prescribed by the central bank.

they should maintain various ratios and should keep the financial stability. so instead of looking only at the higher return from various assets forits operations , bank has to consider all other factors also.

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