Exam 15: Liability and Liquidity Management

Why have regulators of financial service firms in Australia introduced the deposit guarantee programs? Why may regulators seek to provide greater protection to depositors than to other DI creditors?

What is the average implicit interest rate on a $100 000 account if the bank's average management costs are $2500 and annual fees average $1750?

The contagious effect:

Scenario analysis refers to the part of a bank's liquidity policy that caters for:

The net stable funding ratio requirement promotes a more diversified, stable funding base that ensures that short-term assets are funded by stable liabilities.

Which of the following statements is true?

Authorised depository institutions' liquidity management strategy includes the following elements except:

Managing liabilities as a means of managing liquidity risk involves the trade-off between lower funding cost and higher risk of withdrawals.

Which of the following statements is true?

Measuring stored liquidity is easy because many assets cannot be clearly classified as liquid or non-liquid.

Reserve requirement tax is defined as:

Which of the following are the two main sources of exchange settlement liquidity for Australian FIs provided by RBA repos?

Regulators seek to provide depositor protection to depositors than other FI creditors because deposits are:

Use the following information to answer the question. A current deposit account requires a minimum balance of $500 if annual interest of 5 per cent is to be earned monthly on its deposits. An account holder has maintained an average balance of $300 for the first nine months of the year and $800 for the last three months of the year. She has written an average of 20 cheques a month and is not charged for these services. However, it costs the bank $0.02 to process each cheque. The bank would like to limit the average return (both explicit and implicit) earned by the account holder to 5 per cent per year. How much should it charge for processing each check to this Account holder assuming that it will pay annual interest of 5 per cent and minimum balances of $200 are maintained?

The supervision of FI's liquidity management is undertaken by the:

Basel III liquidity reforms:

All of the following are associated with contagious runs except:

The adverse effects of a contagious run include the restrictions on the ability of individuals to transfer wealth through time and a negative impact on the level or rate of savings.

Which of the following statements is true?

Which one of the following statements relating to scenario analysis is incorrect?