A disadvantage of using purchased liquidity management to manage a FI's liquidity risk is
A)the resulting shrinkage of the FI's balance sheet.
B)the relatively high cost of purchased liabilities.
C)the accessibility of international money markets.
D)tax considerations.

Question

Quizplus · Accepted Answer

The relatively high cost of purchased liabilities can be a disadvantage of using purchased liquidity management to manage a FI's liquidity risk. This can include high interest rates or fees associated with such liabilities, cutting into the FI's profits.

A Disadvantage of Using Purchased Liquidity Management to Manage a FI's