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    Question

    Cash should be shown under which time bucket for inflow:

    A 1 day Correct Answer Incorrect Answer
    B 2-7 days. Correct Answer Incorrect Answer
    C 8-14 days. Correct Answer Incorrect Answer
    D 15-28 days Correct Answer Incorrect Answer
    E 1-2 months Correct Answer Incorrect Answer

    Solution

    Cash is the most liquid asset and inflow and is therefore classified in the 1 day (known as next day) time bucket under the asset liability management statement. Asset liability management (ALM) can be defined as the comprehensive and dynamic framework for measuring, monitoring and managing the financial risks associated with changing interest rates, foreign exchange rates and other factors that can affect the organisation’s liquidity. Banks have to put their maturing asset and liabilities in 10 time buckets.

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