Asset liabilities management (ALM) helps banks track the difference between the interest paid on deposits and then interest earned on loans which is known as base lending rate.
Bank Liquidity Quiz 2

Quiz
•
Business
•
1st - 10th Grade
•
Medium

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10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
True
False
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Bank Z charges 8 percent interest on a loan and pays a 6 percent rate of interest on deposit, the interest rate margin is
14%
2%
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
ALM is designed to address the risk faced by banks due to a mismatch between assets and liabilities,
True
False
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Bank can with 100 percent certainty predict interest rate fluctuations
True
False
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Financial derivatives instruments in banks must only be used for speculative or investment purposes.
True
False
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Sources of funds for a banks can be summarized into three types: capital, deposits and assets.
True
False
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The assets of a banks can be classified into two broad categories: earning assets and high earning assets.
True
False
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