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A disadvantage of using purchased liquidity management to manage a FI's liquidity risk is
A. the resulting shrinkage of the FI's balance sheet.
B. the relatively high cost of purchased liabilities.
C. the accessibility of international money markets.
D. tax considerations.
E. loss of flexibility as a result of dependence upon purchased liabilities.
B

Sagot :

A disadvantage of using purchased liquidity management to manage a FI's liquidity risk is the relatively high cost of purchased liabilities.

In commercial enterprise, economics or investment, market liquidity is a market's feature wherein an character or firm can quick buy or sell an asset without causing a drastic trade inside the asset's fee. Liquidity includes the trade-off among the charge at which an asset may be sold, and the way quick it is able to be offered. In a liquid marketplace, the exchange-off is moderate: you possibly can sell speedy while not having to accept a considerably decrease rate. In a fairly illiquid market, an asset ought to be discounted if you want to promote quick.[1][2] money, or coins, is the maximum liquid asset because it can be exchanged for goods and offerings right away at face price.[1]

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