Choose the Statement That Is Incorrect

question 5

Multiple Choice

Choose the statement that is incorrect.

• A)A financial institution can be solvent but illiquid.
• B)A firm is illiquid if it has made long-term loans with borrowed funds and is faced with a sudden demand to repay more of what is has borrowed than its available cash.
• C)Insolvency and illiquidity were at the core of a global financial meltdown in 2007-2008.
• D)A financial institution's net worth is the market value of what it has lent minus the market value of what it has borrowed.
• E)All of the above are true.

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Definitions:

Chief Justice

The presiding judge in the supreme court of a country or a specific jurisdiction, overseeing the court's administration.

Roger Taney

The fifth Chief Justice of the United States, serving from 1836 until his death in 1864, best known for delivering the majority opinion in Dred Scott v. Sandford (1857), which ruled that African Americans could not be American citizens.

Charles River Bridge v. Warren Bridge

A landmark Supreme Court case in 1837 that dealt with the issue of public vs. private interests and upheld that new projects could proceed even if they harmed existing monopolies.

Interstate Commerce

Interstate commerce involves the purchase, sale, or exchange of commodities, transportation of people, money, or goods, and navigation of waters between different states, regulated by the federal government in the United States.