Because the Average Maturity of Assets and the Average Maturity

question 25

True/False

Because the average maturity of assets and the average maturity of liabilities are often different on an FI's balance sheet, the FI is exposed to liquidity risk.

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Definitions:

Authorized

Having been given official permission or approval to perform a certain action or access certain information.

Shelter Principle

In commercial law, a rule that allows a person who acquires goods in good faith to retain them, even if the sale was not authorized by the owner.

HDC Status

Holder in Due Course Status, which is a legal term that provides certain protections to the holder of a negotiable instrument from claims and defenses that could be raised by prior parties.

Marketability

The ability of a product or service to be sold or accepted in a market.