Exam 18: Liability and Liquidity Management

Many states in the U.S. impose liquid asset ratios on insurance companies which may be met by

To reduce liquidity risk an FI can efficiently manage the liability structure of its portfolio.

In most countries, assets used to satisfy the liquid assets ratio may include liquid government securities.

Requiring minimum reserves to be held at the central bank is the equivalent of

In the U.S., cash reserves necessary to meet deposit reserve requirements typically include vault cash and cash deposits at the Federal Reserve Bank.

Which of the following is an outcome of a decrease in the reserve requirement ratio?

In the U.S., banks can hold cash and government securities to meet reserve requirements.

Fed funds are short-term uncollateralized loans with maturities that typically do not exceed one day.

Which of the following liability products does NOT have withdrawal risk?

Demand deposits

The DI manager can change the pricing on NOW accounts by changing both implicit and explicit interest payments.