Ultimate access to all questions.
Explanation:
A is correct. The bank’s liquidity cushion real costs are best reduced through long-term funding.
B is incorrect. Contingent bank obligations such as collateral calls and committed lines of credit are assigned a liquidity transfer price when established.
C is incorrect. A matched-maturity marginal cost of funds approach is the most accurate transfer pricing formula.
D is incorrect. Liquidity transfer pricing should reflect the costs, benefits and risks of respective businesses.
No comments yet.
A
The real costs of the bank’s liquidity cushion are best reduced through long-term funding.
B
LTP of contingent bank obligations, such as collateral calls and committed lines of credit, can only be conducted after the first drawdown.
C
A pooled average cost of funds approach is the most accurate LTP formula.
D
A liquidity transfer price should reflect the costs, benefits, and risks of the bank as a whole.