FINSIA Professional Banking Fundamentals Practice Questions - FINSIA Professional Banking Fundamentals (Career Qualified In Banking) Exam

What does maturity transformation mean for a bank?

The bank only lends for one day and never offers term products The bank eliminates all interest-rate risk by matching every loan to an identical deposit The bank converts all loans to shares overnight The bank borrows short-term (for example deposits) and lends longer-term, managing the timing mismatch

Correct Answer:

The bank borrows short-term (for example deposits) and lends longer-term, managing the timing mismatch

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