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Questions and Answers
Bank managers have three primary concerns
Bank managers have three primary concerns
False
The second concern of the bank manager is asset management
The second concern of the bank manager is asset management
True
The first concern of the bank manager is liquidity management
The first concern of the bank manager is liquidity management
True
The bank manager does not have to consider liability management
The bank manager does not have to consider liability management
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The bank manager must decide the amount of capital the bank should maintain
The bank manager must decide the amount of capital the bank should maintain
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Study Notes
Bank Manager's Primary Concerns
- Ensure the bank has sufficient ready cash to meet depositors' demands during deposit outflows, i.e., when deposits are lost due to withdrawals and payment demands.
- Engage in liquidity management to acquire liquid assets that meet the bank's obligations to depositors.
Risk Management
- Pursue an acceptably low level of risk by acquiring assets with low default rates.
- Diversify asset holdings to minimize risk.
Funding Acquisition
- Acquire funds at low cost through liability management.
Capital Management
- Determine the necessary amount of capital for the bank.
- Acquire the required capital to maintain capital adequacy.
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Description
Test your knowledge of bank management with this quiz on liquidity management. Explore the primary concerns of a bank manager, including maintaining enough ready cash to meet deposit outflows and acquiring liquid assets to fulfill the bank's obligations.
