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Lenders normally wish to offer their funds for the short term, but most borrowers prefer to borrow over the long term. Resolving this mismatch is known as:
Suggested Answer: C
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21 comments · newest first
BA
Barabara
10 months ago
Maturity transformation is key in finance, no doubt!
TR
Trina
10 months ago
Yup, lenders and borrowers definitely have different timelines.
SA
Sarina
10 months ago
Wait, is that really what it's called? Sounds off.
AN
Angelo
10 months ago
Totally agree, that's the right term.
BI
Billy
11 months ago
It's called maturity transformation!
LI
Lina
11 months ago
I vaguely recall discussing this in class, and I believe maturity transformation was the term we focused on when talking about the lender-borrower mismatch.
EL
Eleni
12 months ago
I feel like I might confuse this with pooling or aggregation. They all sound similar, but I think maturity transformation is the right answer here.
DE
Delila
12 months ago
I remember practicing a question similar to this, and I think the term we used was maturity transformation. It makes sense given the context.
IV
Ivette
12 months ago
I think this is related to how banks manage their assets and liabilities, but I'm not entirely sure if it's called maturity transformation or something else.
RO
Rory
1 year ago
I'm a bit confused by the wording of this question. What exactly do they mean by "resolving this mismatch"? Is that just referring to the process of matching lenders and borrowers with different term preferences? I'll have to re-read it a few times to make sure I understand.
FR
Francoise
1 year ago
Okay, I remember learning about this in class. Lenders want short-term loans to manage their liquidity, but borrowers prefer long-term loans. Maturity transformation is the process of taking those mismatched preferences and finding a solution. I'm confident C is the right answer.
KR
Kristeen
1 year ago
Hmm, this is a tricky one. I'm not totally sure about the difference between maturity transformation and the other options like risk reduction or aggregation. I'll have to think this through carefully.
GA
Gary
1 year ago
I think this is asking about how lenders and borrowers have different preferences for loan terms, and the process of reconciling those differences. I'm pretty sure the answer is C, maturity transformation.
LA
Lashunda
1 year ago
But wouldn't pooling also help in resolving the mismatch?
KI
Kiley
1 year ago
I think the correct answer is C) Maturity transformation. It's all about resolving the mismatch between short-term lenders and long-term borrowers.
OR
Orville
10 months ago
Definitely! It’s crucial for balancing the needs of both sides.
ED
Eden
10 months ago
I agree, C) Maturity transformation makes the most sense.
GA
Galen
11 months ago
Maturity transformation is key in finance. Good call!
LE
Lelia
11 months ago
I like that answer too! It really explains the situation well.
HA
Han
1 year ago
I agree with Hubert, lenders and borrowers have different preferences.
HU
Hubert
1 year ago
I think the answer is C) Maturity transformation.