Final answer:
The missing term for the equation 'Investment securities plus ________ is equal to a bank's earning assets' is 'net loans and leases.' These, along with investment securities, are the main components that banks use to generate income through interest and fees.
Step-by-step explanation:
The student asked, "Investment securities plus ________ is equal to a bank's earning assets." The correct answer to fill in the blank is net loans and leases. A bank's earning assets typically include both investment securities and net loans and leases. The term 'net loans and leases' accounts for the total amount of loans and leases that a bank has provided to customers, minus any provisions for loan losses. These, along with investment securities such as bonds, are what the bank uses to generate income.
To provide additional context, a bank's assets also include cash held in vaults and reserves held at the Federal Reserve Bank, as well as loans to customers and bonds. Earning assets are crucial for banks because they are sources of revenue, primarily through the interest and fees that accrue from them.