Which of the following statements is true?
A)An FI can manage a drain on deposits or an exercise of a loan commitment in two major ways, these being purchased liquidity management and stored liquidity management.
B)Traditionally, FI managers have relied on stored liquidity management as the primary mechanism of liquidity management.
C)Today, there is a higher reliance on purchased liquidity management.
D)All of the listed options are correct.

Question

Quizplus · Accepted Answer

All the statements are correct. A) Financial Institutions (FIs) manage liquidity through purchased liquidity management (buying funds in the money market) and stored liquidity management (holding liquid assets). B) Historically, FIs have primarily relied on stored liquidity management. C) In recent times, there's been a shift towards more reliance on purchased liquidity management due to its flexibility and efficiency.

Which of the Following Statements Is True