Answer: An increasing hot money ratio.

## Explanation An increasing hot money ratio would create concern for a liquidity manager because: - **Hot money** refers to volatile, short-term deposits that can be withdrawn quickly - **Hot money ratio** = Volatile liabilities / Total liabilities - When this ratio increases, it means the bank is relying more on unstable funding sources that can be withdrawn rapidly during stress periods - This creates liquidity risk and undermines confidence in the bank's stability **Analysis of other options:** - **B. Increasing deposit composition ratio**: This typically refers to the proportion of stable core deposits, which is generally positive for liquidity - **C. Increases in reverse repurchase agreements**: These are short-term secured funding sources that can provide liquidity, not necessarily concerning - **D. Excess of federal funds sold over purchased**: This indicates the bank is lending more than borrowing in the interbank market, which can be a sign of excess liquidity Therefore, only option A represents a concerning indicator for liquidity stability.

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