Banking Practice Showdown 2025 – Vault into Your Future Success!

A volatile liability refers to a type of financial obligation that can increase or decrease significantly in a short period of time, often influenced by market conditions or investor behavior. In the context of this question, all the options given qualify as volatile liabilities.

Jumbo certificates of deposit (CDs) are large-denomination deposits typically offered by banks and can be withdrawn with little notice. Their interest rates can fluctuate based on market conditions, making them sensitive to changes in investor sentiment and thus volatile.

Deposits in foreign offices, which are often held in currencies other than the domestic currency, can also experience volatility stemming from exchange rate fluctuations and geopolitical factors. These deposits can be withdrawn or transferred easily, contributing to their characterization as volatile liabilities.

Repurchase agreements, or repos, are short-term borrowing arrangements where securities are sold and agreed to be repurchased at a later date, usually overnight. These agreements can change frequently based on the liquidity needs of financial institutions and market requirements, thus categorizing them as volatile liabilities as well.

Since all the options presented share the characteristic of being subject to rapid changes in market conditions and investor behavior, it is accurate to conclude that they collectively represent volatile liabilities.