In Managing Its Liabilities to Deal with Liquidity Problems,banks Trade

question 123

Multiple Choice

In managing its liabilities to deal with liquidity problems,banks trade off

• A) credit risk against interest rate risk.
• B) adverse selection against moral hazard.
• C) the need for available funds to meet deposit outflows against the desire for greater profit.
• D) present tax liabilities against future tax liabilities.

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Definitions:

Functional Lines

Functional lines refer to the various departments or units within an organization, each with specific responsibilities and roles.

Functional Expertise

Refers to the specific knowledge and skills that enable an individual to excel in a particular job or industry.

Economies of Scale

Cost advantages that a business obtains due to expansion, where the average cost per unit of output decreases with the increase in scale of production.

Functional Organizations

A type of organizational structure that groups employees based on their specialized roles or functions.