Problem:
The underlying goal of commerical bank management is to maximize the wealth of the bank's shareholders, which implies maximizing the price of the bank's stock (if the bank is publicly traded). A bank's board of directors needs to monitor bank managers to ensure that managerial decisions are intended to serve shareholders.
Required:
Question 1: What strategies can you implement to ensure the effectiveness of the above principles?
Question 2: Which do you think would be the easiest to implement? Why?
Question 3: In your opinion, what is the best way for a bank to manage its liquidity?
Note: Please provide reasons to support your answer.