Question 1

Many depository institutions hold __________ balances (extra reserves)to help prevent overdraft penalties.

Accepted Answer

precautionary

Question 2

A(n)_________________________ is the person in a bank,responsible for the bank's cash position and meeting legal reserve requirements.

Accepted Answer

money position manager

Question 3

In the _____________ approach to managing liquidity,deposits and other sources of funds are divided into categories and,then liquidity managers must set aside liquid funds according to some desired operating rule.

Accepted Answer

structure of funds

Question 4

_________________________ is the availability of cash in the amount needed at a reasonable cost.

Accepted Answer

The answer of _________________________ is the availability of cash in...

Question 5

When a financial institution sells assets to manage liquidity,it faces ________________________.It loses future earnings on those assets,incurs transaction costs on those sales,and the assets most easily sold often have the lowest return.

Accepted Answer

The answer of When a financial institution sells assets to...

Question 6

A _________________________ is the difference between an institution's sources and uses of funds.

Accepted Answer

The answer of A _________________________ is the difference between an...

Question 7

A(n)__________________ is an asset which can be converted into cash easily,which has a relatively stable price,and is reversible so that the sellers can recover their original investment with little risk of loss.

Accepted Answer

The answer of A(n)__________________ is an asset which can be...

Question 8

The oldest approach to meeting liquidity needs,which relies on the sale of liquid assets to meet liquidity demands is called ________________________.

Accepted Answer

The answer of The oldest approach to meeting liquidity needs,which...

Question 9

A(n)_________________________ is an account many banks hold at the Federal Reserve to cover any checks drawn against the bank.

Accepted Answer

The answer of A(n)_________________________ is an account many banks hold...

Question 10

The method used in the U.S.to determine a bank's legal reserve requirement,in which the period for holding legal reserves follows the period used to calculate the required amount of legal reserves,is called ________________________.

Accepted Answer

The answer of The method used in the U.S.to determine...

Question 11

_________________________ are the deposits and other borrowings of a bank which are very interest sensitive or the ones bank is sure will be withdrawn during the current period.

Accepted Answer

The answer of _________________________ are the deposits and other borrowings...

Question 12

_________________________ are the assets a bank must,by law,hold behind its deposits.In the U.S. ,only vault cash and deposits held with the Federal Reserves can be used to meet these requirements.

Accepted Answer

The answer of _________________________ are the assets a bank must,by...

Question 13

For several decades,the largest banks around the world have chosen _____________,which calls for borrowing immediately spendable funds to cover all anticipated demands for liquidity.

Accepted Answer

The answer of For several decades,the largest banks around the...

Question 14

Under a _________________________ strategy,some of the expected demands for liquidity are stored in assets,while others are backstopped by arrangements for lines of credit from banks or other suppliers of funds.

Accepted Answer

The answer of Under a _________________________ strategy,some of the expected...

Question 15

Not all _____________ banks around the world have reserve requirements.

Accepted Answer

The answer of Not all _____________ banks around the world...

Question 16

The fed funds rate is generally most volatile on a bank's __________ day.

Accepted Answer

The answer of The fed funds rate is generally most...

Question 17

A(n)_________________________ is a service developed by banks where a bank shifts money overnight out of accounts with reserve requirements into savings accounts and other similar accounts with no reserve requirements

Accepted Answer

The answer of A(n)_________________________ is a service developed by banks...

Question 18

_________________________ is a strategy in which a financial institution borrows in the money market to meet its liquidity needs.

Accepted Answer

The answer of _________________________ is a strategy in which a...

Question 19

The ________________ approach to managing liquidity starts with two simple facts,liquidity rises as deposits increase and loans decrease,and liquidity falls when deposits fall and loans increase.

Accepted Answer

The answer of The ________________ approach to managing liquidity starts...

Question 20

_________________________ is a 14 day period stretching from a Thursday to a Wednesday.This is the period in which a bank has to keep its average daily level of required reserves for a particular computation period with the Federal Reserve bank in the region.

Accepted Answer

The answer of _________________________ is a 14 day period stretching...

Quiz 11: Liquidity and Reserves Management: Strategies and Policies