Reference no: EM131401561
Prepare an analysis in which you address the following questions:
1. List and describe in detail at least two (2) benefits of a financial institution holding large amounts of liquid assets.
2. List and describe in detail at least two (2) costs of a financial institution holding large amounts of liquid assets.
3. Discuss the relationship among the maturity of financial institutions assets relative to its liabilities with respect to liquidity risk management.
4. Define in your own words (in a few sentences each) the following terms:
- Money market deposit account.
- Demand deposits.
- Certificates of deposit.
- Federal funds.
- Bankers' acceptances.
- Eurodollar deposits.
- NOW accounts.
- Wholesale CDs.
- Passbook savings.
- Repos.
- Commercial paper.
5. Referring back to the list in question 4, rank the liabilities according to funding risk, from the smallest to the largest.
6. Referring back to the list in question 4, rank the liabilities in the list according to funding cost, from the smallest to the largest.
7. Based on your rankings, what is the relationship between funding risk and funding cost? What does this relationship make sense?
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Cash flow generating asset
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Estimated in her original analysis
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Relationship among maturity of financial institutions assets
: Discuss the relationship among the maturity of financial institutions assets relative to its liabilities with respect to liquidity risk management.
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Prepare the journal entries to record the transactions
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