Which of the following is considered a characteristic of a nondeposit liability?
A)freedom from reserve requirements
B) not subject to Regulation Q ceilings
C) freedom of banks to pay the prevailing interest rate in the market
D) All of the above are correct.

Question

Quizplus · Accepted Answer

All of the choices listed are considered characteristics of nondeposit liabilities. Freedom from reserve requirements means that these liabilities do not need to be held in reserve by banks, allowing them to use the funds as they see fit. Nondeposit liabilities are not subject to Regulation Q ceilings, which are restrictions on the interest rates banks can pay on certain types of deposits. Finally, because nondeposit liabilities are not considered deposits, banks are free to pay the prevailing interest rate in the market without worrying about violating any regulations.

Which of the Following Is Considered a Characteristic of a Nondeposit