Which of the following statements is true?
A)Immediate liquidity obligations refer to the liquidity required of an FI so that it has sufficient funds to repay shareholders immediately.
B)Immediate liquidity obligations refer to the liquidity required of an FI so that it has sufficient funds to finance new loan demand.
C)Immediate liquidity obligations refer to the liquidity required of an FI so that it has sufficient funds to repay fully and promptly all maturing liabilities.
D)Immediate liquidity obligations refer to the liquidity required of an FI so that it has sufficient funds to repay all short-term liabilities immediately.

Question

Quizplus · Accepted Answer

Immediate liquidity obligations refer to the ability of an FI to repay fully and promptly all maturing liabilities as they come due. This includes obligations such as deposits, borrowings, and other liabilities that have a fixed repayment schedule. It does not refer to the need to finance new loan demand or repay shareholders immediately, as stated in options A and B. Option D is too narrow, as it only refers to short-term liabilities, whereas immediate liquidity obligations also include longer-term liabilities that are due in the near future.

Which of the Following Statements Is True