Conceptually, an FI's trading portfolio can be differentiated from its investment portfolio by

Question

Quizplus · Accepted Answer

The difference between an FI's trading portfolio and its investment portfolio is primarily based on liquidity and time horizon. The trading portfolio consists of assets that are bought and sold frequently to generate short-term profits, while the investment portfolio is composed of assets held for long-term gains or for strategic purposes. The size of assets and the effects of interest rate changes can apply to both portfolios and do not differentiate them from each other.

Conceptually, an FI's Trading Portfolio Can Be Differentiated from Its