Which of the following statements describes a liquidity risk? Select one: a. Uncertain amount and timing of cash demands and cash sources. b. The uncertain impact of foreign currency exchange rates on the value of a transaction (eg. contract to buy or sell). c. The uncertain impact of commodity prices on the value of a transaction (eg. contract to buy or sell). d. Uncertainty in the value of a business caused by changes in market variables.

Which of the following is NOT a potential cause of liquidity risk for a bank? A.A decrease in the availability of short-term borrowed funds.B.An increase in requests by depositors to withdrawal large amounts of deposits.C.A decrease in the bank's stock price caused by market factors.D.An increase in requests to fund large amounts of loan commitments.E.A decrease in asset prices of securities held in the investment portfolio.

A firm's liquidity refers to __.Multiple choice question.its ability to meet its current obligations as they become duethe excess of its cash and accounts receivable over its accounts payable and other accrued liabilitiesthe excess of its total assets over its total liabilitiesthe cash available to pay its current liabilities as they become due

Liquidity can be defined as:The ability of a business to raise capital from the marketThe ability of a business to convert its current assets into cash easilyAll three optionsThe ability of a business to get loans easily from banksReport feedback

Which of the followings is most likely to be true in describing the relationship between liquidity riskand bond yield relative to the Treasury bond? All else being equal, bonds that are:a) Less liquid have lower yield compared to Treasury bondsb) More liquid have higher yield compared to Treasury bondsc) Less liquid have higher yield compared to Treasury bonds

Which of the following statements is TRUE?A.Bank runs occur because customers know that banks will be forced to liquidate assets at fire-sale prices.B.Asset side liquidity risk arises from transactions that result in a transfer of cash to some other asset, such as the exercise of a loan.C.An expected net deposit drain on any given day means that deposit withdrawals are less than deposit inflows. D.Mutual funds tend to have more exposure to liquidity risk than banks. E.In terms of liquidity risk measurement, the financing gap is defined as rate sensitive assets minus rate sensitive liabilities.