1. Commercial bank managers may rely on both sides of the balance sheet to ensure adequate liquidity. Compare and contrast the potential effect on risk and return resulting from asset sources of liquidity as compared to that from liability sources.  How does a bank's size and financial soundness affect its liquidity management options?
2. Suppose you are managing your bank's Treasury bond portfolio.  Your long-term rate forecast is that interest rates will rise. How would this forecast influence the liquidity of your bond portfolio?

Answer rating: 100% (QA)

Commercial bank managers use both sides of the balance sheet to maintain sufficient liquidity The balance sheet consists of assets loans investments etc and liabilities deposits borrowings etc Asset s... View the full answer