A Disadvantage of Using Purchased Liquidity Management to Manage a FI's

question 13

Multiple Choice

A disadvantage of using purchased liquidity management to manage a FI's liquidity risk is

• A)the resulting shrinkage of the FI's balance sheet.
• B)the relatively high cost of purchased liabilities.
• C)the accessibility of international money markets.
• D)tax considerations.

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Definitions:

New York Time

The time zone observed in New York, typically Eastern Standard Time (EST) or Eastern Daylight Time (EDT), depending on the time of year.

SEC

The Securities and Exchange Commission, a U.S. regulatory agency responsible for enforcing federal securities laws and regulating the securities industry.

After-tax Returns

The profit realized from an investment after all applicable taxes have been subtracted.

Portfolio Turnover

A measure of how frequently investments are bought and sold within a portfolio during a specified period of time.