FRM Part II · FRM Exam Part II · Managing Nondeposit Liabilities
Which indicator would best help a treasurer monitor the cost and stability of wholesale funding on an ongoing basis?
Tracking the bank's unsecured funding spread over a benchmark together with the share of funding from its largest providers is best. The spread shows cost and market confidence, while the concentration share shows dependence, so both serve as early warning signals.
- ASpread of the bank's unsecured funding over a benchmark rate, tracked with the share of funding from the top providersCorrect
- BThe bank's historical dividend payout ratio
- CThe number of branches opened during the year
- DThe average age of the bank's fixed assets
Explanation
Funding spreads reflect market perception and cost, while top-provider shares reveal concentration. Together they act as early warning measures. The other items are unrelated to funding stability.
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