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The liquidity component of the CAMELS rating refers to ____


(A) regulators' concern about how a bank's earnings would change if economic conditions change.

(B) how well the bank's management would detect its own financial problems.

(C) a bank's sensitivity to financial market conditions.

(D) monitoring the type of loans that are given, the bank's process for deciding whether to provide loans, and the credit rating of debt securities that it purchases.

(E) excessive use by banks of purchase funds and other outside sources, such as the discount window.

Respuesta :

Answer:

The correct answer is letter "E": excessive use by banks of purchase funds and other outside sources, such as the discount window.

Explanation:

The CAMELS (Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity) rating system is used to evaluate banks' level of risk in overall conditions. The Liquidity factor of the approach refers to how quickly a bank can turn assets into cash and the excess of its borrowing from outside sources like the window discount.

Answer:

CAMELS is an international rating system used by regulatory banking authorities to rate financial institutions, according to the six factors represented by its acronym. The CAMELS acronym stands for "Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity."

Explanation:

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