Which of the following is true for immunization strategy?

a.

There is a trade-off between profitability and transaction costs.

b.

The immunization strategy usually requires the portfolio manager to rebalance the portfolio every year

c.

It can involve costly labor cost.

d.

The bank owners and the regulators may have different objectives.

The purpose of calculating and reporting net stable funding ratio is to

a.

Ensure that a DI maintains an adequate level of high-quality liquid assets that can be converted into cash

b.

Ensure that a DI's long-term assets are funded with adequate amount of stable liabilities

c.

Ensure that a DI has enough capital to absorb potential liquidity risk

d.

Ensure that a DI's cash inflow exceeds its cash outflow

An FI holds the following Level 1 HQLA: cash ($15), deposits at the Fed ($40), T-bills ($145), qualifying marketable securities ($50). It also holds the following Level 2A HQLA: GNMA bonds ($60), loans to AA- corporations ($540). The FI's liability items and their run-off factors (in parenthesis) are: stable retail deposits $190 (3%), less stable retail deposits $80 (10%), CDs $100 (0%), stable small business deposits $125 (5%), less stable small business deposits $100 (10%), and nonfinancial corporates $450 (75%). The FI's expected cash inflow in the next 30 days is $8.5. What is the FI's liquidity coverage ratio?

a.

97%

b.

116%

c.

88%

d.

86%

As of October 2018, according to Regulation D of the Federal Reserve Act of 1913, a DI with $256 million of net transaction accounts during the computational period is allowed to have much cash reserve deficit per day during the maintenance period without penalty?

a.

11.516

b.

0.682

c.

0.662

d.

1.171

Which of the following is not a reason why the amount of excess reserves skyrocketed starting from 2008?

a.

Fed began paying interest on reserves

b.

Much of the liquidity injections was sitting idle in banks' reserve accounts

c.

The interest rate paid on reserves before 2008 was lower than market rate

d.

Fed injected large amount of liquidity into FIs in response to the financial crisis