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Bank A is currently experiencing a shortfall in its legal reserve requirements, while Bank B is dealing with a significant decrease in the renewal rates of its long-term Certificates of Deposit (CDs) owing to intense local competition. Considering these challenges, what are the most appropriate funding strategies for each bank? Please also take into account the timing of the funding needs and the accessibility of non-deposit sources of funds when formulating your recommendations.
A
Bank A should borrow from the wholesale deposit market and Bank B should fund itself through the Eurocurrency deposit market.
B
Bank A should fund itself through the commercial paper (CP) market and Bank B should borrow from the Federal funds market.
C
Bank A should borrow from the Federal funds market and Bank B should borrow from the Federal Home Loan Banks.
D
Bank A should issue debentures and Bank B should fund itself through the CP market.