Because the average maturity of assets and the average maturity of liabilities are often different on an FI's balance sheet, the FI is exposed to liquidity risk

Question

Quizplus · Accepted Answer

The difference in average maturity of assets and liabilities exposes an FI to interest rate risk, not directly to liquidity risk. Liquidity risk arises from the inability to meet obligations when they come due without incurring unacceptable losses, not merely from maturity mismatches.

Because the Average Maturity of Assets and the Average Maturity