Which of the following would be an example of a nonrepriceable liability?
A)Money the bank has borrowed from the money market
B)Cash in the vault
C)Demand deposits that do not pay an interest rate
D)Short term securities issued by the government about to mature
E)All of the options are correct.

Question

Quizplus · Accepted Answer

Nonrepriceable liabilities are those that do not have an interest rate that will adjust in response to changes in market interest rates. Demand deposits that do not pay an interest rate are an example of a nonrepriceable liability because the bank cannot adjust the interest rate it pays on these deposits in response to changes in market interest rates. Money borrowed from the money market (A), cash in the vault (B), and short term securities issued by the government about to mature (D) are all examples of assets or liabilities that can be repriced in response to changes in market interest rates, so they are not nonrepriceable liabilities.

Which of the Following Would Be an Example of a Nonrepriceable