Final answer:
Liabilities concern whom to pay, how much to pay, and when to pay, critical aspects of managing finances and keeping a balanced budget. The money under assets on a bank's balance sheet represents various forms of holdings, not just physical cash. Purchasing loans in the secondary market is influenced by factors like repayment history, economic interest rates, and the borrowers' financial conditions.
Step-by-step explanation:
Liabilities involve addressing issues of whom to pay, how much to pay, and when to pay. These considerations are essential for financial management and maintaining a balanced budget. It's crucial for entities, whether individuals or businesses, to ensure they have the resources necessary to meet these financial obligations.
In the context of a bank's assets, the money listed under assets on a balance sheet may not actually be physically in the bank because it includes reserves held at the Federal Reserve, loans made to customers, and bonds. Banks manage these assets to remain solvent and profitable.
When buying loans in the secondary market, a financial services company may offer more or less for a loan based on various factors like the borrower's payment history, changes in overall interest rates, and the profitability of the borrower's firm