FIs with a Steady and Predictable Inflow and Outflow of Funds

question 36

Multiple Choice

FIs with a steady and predictable inflow and outflow of funds

• A)hold highly liquid assets.
• B)hold more long-term and less liquid assets than intermediaries whose inflows and outflows are not as steady and predictable.
• C)are much more solvent than other intermediaries.
• D)hold many short-term assets.

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Definitions:

Salvage Value

The expected remaining valuation of an asset after its service life has ended.

Straight-Line Method

A method of allocating the cost of a tangible asset over its useful life in equal annual installments.

Net Present Value

A method used to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period.

Discount Rate

The interest rate used in discounted cash flow (DCF) analyses to determine the present value of future cash flows.