Which of the following statements is true?
A)A major reason for cheque accounts to be excluded from an FI's interest-sensitive liabilities is that the majority of these accounts are core deposits.
B)Cheque accounts should be treated as interest-sensitive liabilities because if interest rates fall, deposits might be withdrawn and thus will need to be replaced by higher-yielding deposits.
C)The final decision whether or not to include cheque accounts as rate sensitive liabilities must be made by predicting depositors' behaviours.
D)None of the listed options are correct.

Question

Quizplus · Accepted Answer

Cheque accounts are typically considered core deposits because they are viewed as stable and are generally not tied to interest rates. Therefore, they are not typically included in an FI's interest-sensitive liabilities. Option B is incorrect as it suggests that cheque accounts should be treated as rate-sensitive liabilities, which is not the case. Option C may be partially correct as predicting depositors' behavior can be a factor in the decision-making process, but it is not the final determining factor. Option D is incorrect as option A is correct.

Which of the Following Statements Is True