Which of the following rankings of liabilities is correct if they are ranked by withdrawal risk from riskiest to least risky?
A)Federal funds; demand deposits; certificates of deposit.
B)Demand deposits; money market demand accounts; certificates of deposit.
C)Repurchase agreements; money market demand accounts; certificates of deposit.
D)Certificates of deposit; federal funds; demand deposits.
E)Passbook savings accounts; money market demand accounts; certificates of deposit.

Question

Quizplus · Accepted Answer

Demand deposits are the riskiest as they can be withdrawn at any time without notice. Money market demand accounts, while also accessible, typically have some limitations or requirements for withdrawals. Certificates of deposit (CDs) are the least risky in terms of withdrawal risk because they have a fixed term, and withdrawing funds early usually incurs a penalty.

Which of the Following Rankings of Liabilities Is Correct If