Which statement about modern matched-maturity transfer pricing in banks is correct?
A) It is now a widely accepted standard that banks should use a single representative transfer price across the entire maturity spectrum.
B) Modern matched-maturity pricing systems include an additional liquidity surcharge that is specifically applied to more liquid short maturities.
C) Matched-maturity transfer prices should represent a weighted average cost of capital that incorporates the cost of equity into the cost of borrowed funds.
D) Modern matched-maturity systems differentiate transfer prices by the maturity of the commitment and also apply a marginal funding cost perspective.

Question

Quizplus · Accepted Answer

Modern matched-maturity transfer pricing in banks commonly differentiate transfer prices by the maturity of the commitment and apply a marginal funding cost perspective. This allows for a more accurate reflection of the real cost of funding, as short-term funding may have a lower cost than long-term funding. Additionally, this approach considers the cost of incremental funding, which is necessary for pricing decisions.

Which Statement About Modern Matched-Maturity Transfer Pricing in Banks Is