The Average Maturity of the Liabilities of an FI's Balance

question 79

Multiple Choice

The average maturity of the liabilities of an FI's balance sheet is equal to

• A)the weighted-average of the liabilities where the weights are determined relative to the total liabilities and equity of the FI.
• B)the weighted-average of the liabilities where the weights are determined relative to the total liabilities of the FI.
• C)the weighted-average of the liabilities where the weights are determined relative to the total assets of the FI.
• D)the weighted-average of the liabilities where the weights are determined using market values of liabilities.
• E)None of the options.
• The balance sheet of XYZ Bank appears below.All figures in millions of U.S.dollars.
• \(
• ~Assets~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Liabilities\\
• \begin{array}{|l|r|r|l|l|r|}
• \hline 1 & \begin{array}{l}
• \text { Short-term consumer } \\
• \text { loans (one-year maturity) }
• \end{array} & \$ 150 & 1 & \text { Equity capital (fixed) } & \$ 120 \\
• \hline 2 & \begin{array}{l}
• \text { Long-term consumer } \\
• \text { loans }
• \end{array} & 125 & 2 & \begin{array}{l}
• \text { Demand deposits } \\
• \text { (two-year maturity) }
• \end{array} & 40 \\
• \hline 3 & \begin{array}{l}
• \text { Three-month Treasury } \\
• \text { bills }
• \end{array} & 130 & 3 & \text { Passbook savings } & 130 \\
• \hline 4 & \text { Six-month Treasury notes } & 135 & 4 & \text { Three-month CDs } & 140 \\
• \hline 5 & \text { Three-year Treasury bond } & 170 & 5 & \begin{array}{l}
• \text { Three-month bankers } \\
• \text { acceptances }
• \end{array} & 120 \\
• \hline 6 & \begin{array}{l}
• 10 \text {-year, fixed-rate } \\
• \text { mortgages }
• \end{array} & 120 & 6 & \begin{array}{l}
• \text { Six-month } \\
• \text { commercial paper }
• \end{array} & 160 \\
• \hline 7 & \begin{array}{l}
• 30 \text {-year, floating-rate } \\
• \text { mortgages (rate adjusted } \\
• \text { every nine months) }
• \end{array} & 140 & 7 & \begin{array}{l}
• \text { One-year time } \\
• \text { deposits }
• \end{array} & 120 \\
• \hline & && 8 & \begin{array}{l}
• \text { Two-year time } \\
• \text { deposits }
• \end{array} & 40 \\
• \hline
• &&\$970&&&\$970\\
• \hline
• \end{array}\)
• [Reference: 8-84]

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