The strategy of varying rates offered on alternative sources of funds to gain a measure of control over incoming funds is known as:
A) Purchase accounting
B) Russian roulette
C) Hedging
D) Liability management
E) Pooled funds approach
F) Funds targeting
G) None of the above

Question

Quizplus · Accepted Answer

Liability management involves adjusting the rates on different sources of funds, such as deposits, to influence the volume and cost of funds obtained. This strategy allows financial institutions to manage their liabilities actively to meet their funding needs and manage interest rate risk.

The Strategy of Varying Rates Offered on Alternative Sources of Funds