The portfolio of a bank that contains assets and liabilities that are relatively illiquid and held for longer holding periods
A)is the trading portfolio.
B)is the investment portfolio.
C)contains only long term derivatives.
D)is subject to regulatory risk.
E)cannot be differentiated on the basis of time horizon and liquidity.

Question

Quizplus · Accepted Answer

The portfolio described in the question is the investment portfolio, which contains assets and liabilities that are held for longer periods and are not traded frequently. This portfolio is typically made up of investments such as bonds, securities, and loans. It is distinct from the trading portfolio, which is made up of assets that are bought and sold frequently and are held for shorter periods. The investment portfolio is subject to regulatory risk as it is held for longer periods and requires a different set of risk management strategies compared to the trading portfolio.

The Portfolio of a Bank That Contains Assets and Liabilities