Which of the Following Is Not the Responsibility of the Asset

question 452

Multiple Choice

Which of the following is not the responsibility of the asset and liability committee (ALCO) ?

• A) ensure that compliance is carried out efficiently
• B) set limits on borrowing in the short-term markets to fund long-term lending
• C) develop, evaluate, monitor and approve strategies related to risk due to imbalances in the asset and liability structure of the balance sheet
• D) report to the board of directors

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Definitions:

Security

A financial instrument representing ownership in a publicly-traded corporation (stock), a creditor relationship with a government or corporation (bond), or rights to ownership as represented by an option.

Rate of Return

The profit or deficit from an investment during a designated time frame, represented as a fraction of the investment's initial value.

Security Market Line

A graphical representation that shows the relationship between the risk of an investment and its expected return, based on the capital asset pricing model.

Expected Return-Beta Relationship

The concept that the expected return of an investment is dependent on its beta, which measures its systemic risk relative to the overall market.