Banks are, by nature, conservative. They want to keep an even keel. Most of the time. Sometimes, of course, they get as wild as a bachelorette party in Vegas...we’re looking at you, 2007-2008. But let's just agree to the general premise that, most of the time, banks are stereotypically pretty...button-down.
As banks generally look to keep risk under control, they purposely create a mix in their assets and debt obligations, so they have a safe amount of diversification.
This practice is known as liability management. It involves keeping a mix of maturities and products when they make loans or other investments.
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Finance Allah shmoop What is a crude liability You've been
taking free rides toe work from your vampire buddy Bernie
Yep He not only sucks he flies to you promised
him four bucks a ride payable a soon as daylight
savings makes you know the daylight too bright for him
to fly He could only give you a ride when
it's totally dark outside so you know he's got a
pretty bad sun allergy As you might guess Well anyway
after a hundred rides you realize that your crude liability
to Bernie is four hundred bucks Right there is the
math So that's a simple version Large companies with big
demands for materials or services or rent or whatever is
typically carry large at crude liabilities rights money they owe
And as you might guess they buy much or most
are almost all of their products on credit you know
credit given by the company who sold the product in
the first place Well guess what those liabilities at Crew
or just add up the company's got to pay its
bills eventually Right so big a crude liability numbers are
dangerous If you see a company having huge accounts liabilities
payable on their balance sheet So they keep adding up
until the company who took them well writes a check
and pays down that liability But you know don't worry
if you don't pay up for those rides Bernie accepts 00:01:14.21 --> [endTime] alternative methods of Payment what Oh
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