At the end of the year, you were assigned by the Asset Liability Committee (ALCO) in one of the big banks in Kuala Lumpur to assess liquidity needs for next year. Your team has collected data for the Net Deposit Drain for the last 250 days and found that the mean of these observations is +3 % with a Standard Deviation of 1%. Your team found also that the bank has an excellent market portfolio in the region and can easily raise needed funds to address the unexpected withdrawals and issue a Wholesale Certificate of Deposits (CDs) at a reasonable cost in Sydney, Kuala Lumpur and Tokyo. Which of the following is true

A.

Assuming 95% confidence, the decrease of deposits will be between 2 and 5 per cent.

B.

Assuming 90% confidence, the increase of deposits will be between 1 and 4 percent

C.

Assuming 99% confidence, the increase of deposits will be between -1 and 6 per cent

D.

The bank will decrease in size.

E.

None of the listed options is correct.

Clear my choice