Liquidity Risk May Be Reduced by Which of the Following

question 25

Multiple Choice

Liquidity risk may be reduced by which of the following?

• A)the purchase of fed funds, repurchase agreements, and Eurodollars
• B)the purchase of currency swaps
• C)the purchase of interest rate swaps
• D)All of the above are correct.

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Definitions:

Staggered Board

A corporate board of directors structure where members are divided into classes serving different term lengths, making it difficult for a complete board takeover in any single election.

Poison Pills

A defensive strategy used by companies to deter hostile takeovers by making the company less attractive to potential acquirers.

Discount Rate

The interest rate charged to commercial banks and other depository institutions by a central bank for loans, used as a tool for regulating monetary policy.

Cost of Capital

The minimum return a corporation must achieve on its investment activities to keep its market price stable and entice financing.