To reduce liquidity risk an FI can efficiently manage the liability structure of its portfolio.

Name: To reduce liquidity risk an FI can efficiently manage the liability structure of its portfolio.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

By managing the liability structure, an FI can match the maturities of its liabilities with the maturities of its assets, reducing the likelihood of having to sell assets at a loss in a liquidity crunch. This helps to mitigate liquidity risk.

To Reduce Liquidity Risk an FI Can Efficiently Manage the Liability