Which of the following are rate-sensitive liabilities?
A) Short-term consumer loans, cheque accounts and three-month Treasury notes.
B) Three-month term deposits, three month bankers' acceptances, six-month negotiable certificates of deposit and one-year term deposits.
C) Short-term consumer loans, six-month negotiable certificates of deposit and one-year term deposits.
D) Short-term consumer loans, six-month Treasury notes and three-year Treasury bonds.

Question

Quizplus · Accepted Answer

Rate-sensitive liabilities are those whose interest or yield rates are tied to market rates and fluctuate accordingly. Three-month term deposits, three-month bankers' acceptances, six-month negotiable certificates of deposit and one-year term deposits are examples of such liabilities, as their rates are determined by prevailing market rates. Short-term consumer loans and cheque accounts in option A, for instance, are not rate-sensitive, as their interest rates are fixed and do not vary with market rates. Option C includes consumer loans, which are not rate-sensitive, but adds six-month negotiable certificates of deposit and one-year term deposits, which are rate-sensitive. Option D includes six-month Treasury notes, which are rate-sensitive, and three-year Treasury bonds, which are not rate-sensitive.

Which of the Following Are Rate-Sensitive Liabilities