Final answer:
Another term for paper assets such as securities, stocks, and bonds is financial assets. These include ownership or creditor claims that are expected to provide future income streams. Government bonds are a secure form of financial asset that banks often purchase.
Step-by-step explanation:
Another term for paper assets such as securities, stocks, and bonds is financial assets. These are instruments that represent an ownership position in a corporation (stocks), a creditor relationship with a governmental body or a corporation (bonds), or rights to ownership as represented by an option. When banks and other financial institutions invest in these securities, they are purchasing claims on the future income and assets of the issuer, such as the federal government or private corporations. It is notable that government bonds are particularly low-risk because the repayment of the principal and interest by the government is nearly guaranteed, hence they are popular as steady investments with consistent returns.
For instance, if a bank buys a U.S. government bond, it is essentially lending money to the government in exchange for a series of future payments. These government securities are considered an asset to the bank, much like loans, due to the expected income stream they will generate over time. As per the provided information, for example, the Safe and Secure Bank holds $4 million worth of such bonds.