Financial institutions face significant liquidity problems because of:
A)imbalances between the maturities of their assets and liabilities.
B)their high proportion of liabilities subject to immediate withdrawal.
C)the sensitivity of their business to changes in interest rates.
D)imbalances between the maturities of their assets and liabilities and their high proportion of liabilities subject to immediate withdrawal.
E)All of the answer options are correct.

Question

Quizplus · Accepted Answer

Financial institutions often face liquidity problems due to imbalances between the maturities of their assets and liabilities, a high proportion of liabilities subject to immediate withdrawal, and the sensitivity of their business to changes in interest rates. All these factors can strain their liquidity.

Financial Institutions Face Significant Liquidity Problems Because Of