Selling securities that it owns, requires that the depository institution invest a portion of its funds in securities that are both illiquid and have a lot of price risk.

Question

Quizplus · Accepted Answer

Selling securities that a depository institution owns does not necessarily require it to invest in illiquid and high-price risk securities. The institution could choose to invest in more liquid and lower-risk securities instead.

Selling Securities That It Owns, Requires That the Depository Institution