If the Bank Decides to Cut Down on Interest Expenses

Multiple Choice

If the bank decides to cut down on interest expenses by reducing its dependence upon borrowed funds, what policy must the bank follow?

A) Manage liquidity risk exclusively through reserve asset management.
B) Manage liquidity risk exclusively through liability management.
C) Reduce the bank's dependence upon demand deposits.
D) Increase interest income by increasing lending.
E) Increase interest income by increasing securities holdings.