Which of the following is false?
A)Appropriate liquidity planning can lower the cost of funds of an FI and thus increase its profitability.
B)Appropriate liquidity planning can maximise the amount of excess cash reserves.
C)Appropriate liquidity planning can limit an FI's liquidity risk.
D)None of the listed options are correct.

Question

Quizplus · Accepted Answer

Appropriate liquidity planning aims to optimize, not maximize, the amount of excess cash reserves. Maximizing excess cash reserves could lead to lower profitability as it might mean holding too much uninvested cash, which does not earn interest.

Which of the Following Is False