FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Liquidity Risk

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

17-84 A liquidity plan will include

A) the size of potential deposit and fund withdrawals.
B) a list of fund providers that are most likely to withdraw funds.
C) the pattern of potential withdrawals.
D) the details and responsibilities of management.
E) All of the above.

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

17-56 A disadvantage of using asset management to manage a FI's liquidity risk is

A) the resulting shrinkage of the FI's balance sheet.
B) the high cost of purchased liabilities.
C) the accessibility of international money markets.
D) tax considerations.
E) loss of flexibility as a result of dependence upon purchased liabilities.

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

17-54 Which of the following observations is NOT true?

17-47 Hedge funds are not susceptible to liquidity risk or a liquidity crisis.

17-41 Government securities represent the reserve asset fund for life insurance companies.

17-45 Liquidation of a mutual fund causes assets to be liquidated and funds received to the dispersed to shareholders on a first come,first served basis.

17-24 The relative time frame for active liquidity management is 2 to 4 months.

17-11 Asset-side liquidity risk may be a result of OBS lending commitments.

17-77 In terms of liquidity risk measurement,the financing requirement is defined as

17-19 High loan commitment banks face less liquidity risk exposure than low commitment banks.

17-34 A contagious run,or bank panic,differs from a run on a bank in that a contagious run involves loss of faith in the entire banking system as opposed to just one bank.

17-87 The price at which an open-end investment fund stands ready to redeem existing shares is the

17-94 What will be the cost of using a strategy of reducing its asset base to meet the expected decline in deposits? Assume that the bank intends to keep $2 million in cash as a liquidity precaution.

17-92 If the bank experiences a $50,000 sudden liquidity drain caused by a loan commitment draw down,what will be the impact on the balance sheet if stored liquidity management techniques are used?

17-90 What are the possible ways that the bank can meet an expected net deposit drain of +4 percent using stored liquidity management techniques?

17-74 A DI has two assets: 50 percent in one-month Treasury bills and 50 percent in real estate loans.If the DI must liquidate its T-bills today,it receives $98 per $100 of face value; if it can wait to liquidate them on maturity (in one month's time) ,it will receive $100 per $100 of face value.If the DI has to liquidate its real estate loans today,it receives $90 per $100 of face value liquidation at the end of one month will produce $92 per $100 of face value.The one-month liquidity index value for this DI's asset portfolio is

17-17 Managing asset-side liquidity risk can involve either purchased liquidity management or stored liquidity management.

17-35 In general,money center banks are exposed to less liquidity risk than smaller,regional banks.

17-25 Liquidity planning primarily is designed to assist management in dealing with relatively predictable events.

17-76 In terms of liquidity risk measurement,the financing gap is defined as