Which of the Following Statements Is NOT True

question 35

Multiple Choice

Which of the following statements is NOT true?

• A)Stored liquidity management involves liquidation of assets.
• B)Traditionally DIs have stored cash reserves at the Federal Reserve and in their vaults to overcome liquidity risk.
• C)When the DI uses its cash as the liquidity adjustment mechanism, both sides of its balance sheet contract.
• D)DIs hold cash reserves in excess of the minimum required to meet liquidity drains.
• E)A DI sustains no cost under stored liquidity risk management.

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Definitions:

Positive Transfer

The beneficial effect of past learning on the acquisition of new knowledge or skills.

Means-end Analysis

A problem-solving technique that involves breaking down a problem into smaller, more manageable parts to achieve a desired goal.

Mental Set

A tendency to approach situations in a certain way because that method worked in the past.

Dramatically Affect

Refers to having a profound or significant impact on something.