Question

What is asset-liability management (ALM) primarily concerned with?

a.

Maximizing short-term profits

b.

Managing the balance sheet to account for alternative interest rate and liquidity scenarios

c.

Minimizing market risk exposure

d.

Increasing leverage to boost returns

Posted under IC 14 Regulations of Insurance Business

Answer: (b).Managing the balance sheet to account for alternative interest rate and liquidity scenarios Explanation:Asset-liability management (ALM) primarily focuses on managing the balance sheet of an institution to account for alternative interest rate and liquidity scenarios. ALM involves strategies and techniques used by financial institutions to match their assets with liabilities in a way that minimizes risks such as credit risk, interest rate risk, and liquidity risk. By effectively managing assets and liabilities, institutions aim to ensure their financial stability and mitigate potential adverse impacts from fluctuations in interest rates and liquidity conditions.

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Q. What is asset-liability management (ALM) primarily concerned with?
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