Which of the following is a factor that affects a bank's decision as to which nondeposit sources of funds to use to cover its projected funds gap?
A)The relative cost of raising the funds.
B)The length of time the funds will be required.
C)The risk associated with each source of funds.
D)The size of the bank.
E)All of the options are correct.

Question

Quizplus · Accepted Answer

All of the options are factors that affect a bank's decision as to which nondeposit sources of funds to use to cover its projected funds gap. The relative cost of raising the funds is important because it will impact the bank's profitability. The length of time the funds will be required is important because the bank may want to use short-term sources for short-term needs and long-term sources for long-term needs. The risk associated with each source of funds is important because the bank must weigh the potential benefits of the funds against the potential risks. The size of the bank may also be a factor because larger banks may have access to different sources of funds than smaller banks. Therefore, all options are correct.

Which of the Following Is a Factor That Affects a Bank's