The proportion of commercial banks' total assets kept in the form of highly liquid assets is known as

Step 1: Analyze the question The question asks for the term describing the proportion of a commercial bank's total assets held as highly liquid assets (such as cash and balances with the central bank).

Step 2: Review the options

• A. Demand deposit: This is money customers keep in current accounts that they can withdraw on demand. It is a liability of the bank, not a proportion of assets.
• B. Fixed deposit: This is money placed with the bank for a fixed period at a given interest rate. It is also a liability.
• C. Cash ratio: This is the proportion of a bank's total assets or deposits kept as cash or other highly liquid assets, so that it can meet customers' withdrawal demands. The central bank often sets a minimum cash ratio as a tool of monetary policy.
• D. Moral suasion: This is a qualitative tool of monetary policy in which the central bank (in Nigeria, the CBN) persuades banks to follow certain policies. It has nothing to do with asset proportions.

Step 3: Identify the answer Only the cash ratio refers to the share of a bank's assets held in liquid form.

Tip: Think "cash ratio = cash relative to total." Whenever you see the word proportion or ratio with liquid assets, think cash ratio or liquidity ratio. Deposits (demand or fixed) are what banks owe customers, while the cash ratio is about what banks keep in reserve.