FM EL 104 Quiz 6

It is the  ability  of  a  bank  to  meet  its  current obligations for cash outflow and to respond to changes in customer demand for loans and cash withdrawals without selling assets at a substantial loss.

• Solidity

• Liquidity

• Marketability

• Accessibility

The following are supplies of liquid funds EXCEPT

• Incoming Customer Deposits

• Revenues from the Sale of Non-deposit Services

• Customer Withdrawals

• Customer Loan Repayments

The following are demands for liquid funds EXCEPT

• Borrowings from the Money Market

• Credit Requests from Quality Loan Customers

• Customer Withdrawals

• Payment of Stockholder Dividends

This is needed to pay the checks for withdrawals and meet other daily needs.

• Immediate Liquidity

• Short-term Liquidity

• Long-term Liquidity

• Contingent Liquidity

This is needed to implement projects, retirement of bonds or shares, replacement of assets.

• Immediate Liquidity

• Short-term Liquidity

• Long-term Liquidity

• Contingent Liquidity

This is needed to meet monthly requirements and seasonal needs

• Immediate Liquidity

• Short-term Liquidity

• Long-term Liquidity

• Contingent Liquidity

This is needed to face the unexpected events like compensation, unexpected loan demands, sudden deposit withdrawals.

• Immediate Liquidity

• Short-term Liquidity

• Long-term Liquidity

• Contingent Liquidity

A bank's net liquidity position is equal to

• Supplies of Liquid Funds

  plus Demands for Liquidity

• Supplies of Liquid Funds

  minus Demands for Liquidity

• Demands for Liquidity minus Supplies of Liquid Funds

• none of these

This strategy calls for storing liquidity in the form of liquid assets and selling them when liquidity is needed.

• Asset Liquidity Management

• Borrowed Liquidity Management

• Balanced Liquidity Management

• Customer Relationship Doctrine

Management should strive to meet all good loans that walk in the door in order to build lasting customer relationships.

• Asset Liquidity Management

• Borrowed Liquidity Management

• Balanced Liquidity Management

• Customer Relationship Doctrine