In which asset type are cash reserves most commonly held?

Cash reserves are most commonly held in liquid assets like savings accounts because these assets provide easy access to funds while maintaining a degree of safety and stability. Liquid assets are designed to be quickly convertible to cash with minimal risk of loss. Savings accounts, for instance, not only allow for immediate availability of cash but also typically offer interest, albeit modest.

In contrast, stocks and bonds may not provide the same level of immediate liquidity, as they can require time to sell and may be subject to market fluctuations. Real estate investments involve longer-term commitments and generally cannot be liquidated quickly without incurring significant costs. Investment portfolios, while they may contain liquid holdings, also include other types of investments that may not be immediately accessible. Thus, the nature of liquid assets makes them the most suitable choice for holding cash reserves.