Conceptually, an FI's trading portfolio can be differentiated from its investment portfolio by
A)liquidity.
B)time horizon.
C)size of assets.
D)effects of interest rate changes.
E)liquidity and time horizon.

Question

Quizplus · Accepted Answer

The liquidity and time horizon of the assets differentiate an FI's trading portfolio from its investment portfolio. Trading portfolios typically have more liquid assets with a shorter time horizon, while investment portfolios have less liquid assets that are held for a longer time period. Other factors such as size of assets and effects of interest rate changes may impact both types of portfolios.

Conceptually, an FI's Trading Portfolio Can Be Differentiated from Its