A Disadvantage of Using Stored Liquidity Management to Manage a FI's

question 54

Multiple Choice

A disadvantage of using stored liquidity management to manage a FI's liquidity risk is

• A)the resulting shrinkage of the FI's balance sheet.
• B)the high cost of purchased liabilities.
• C)the accessibility of international money markets.
• D)tax considerations.
• E)loss of flexibility as a result of dependence upon purchased liabilities.

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Definitions:

Financial Advantage

The benefit gained in financial terms from an action or investment, often measured in terms of profits, savings, or enhanced value.

Making Part

The process involved in the creation or manufacturing of components that will be used in the assembly of a final product.

Purchasing Part

A component required in the production process or maintenance of equipment, acquired through the procurement process.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much contributes to covering fixed costs and generating profit.