Which of the following statements about institutional investors is TRUE?
Click on the arrows to vote for the correct answer
A. B. C. D.A
Banks have high liquidity needs and short time horizons due to the need to maintain a positive spread and the need to pay out deposits and fund loans.
Pension funds are regulated at the Federal level under ERISA and endowments are regulated at the state level. Life Insurance companies have longer time horizons than Property/Casualty Insurance Companies. (Lower liquidity needs usually translate to longer time horizons.) The liquidity and time horizon parameters for defined benefit pension plans are determined by employee age and turnover rate. These are plans where the employer promises the employee a specific income stream upon retirement.