For a Bank,there Is Always a Trade-Off Problem Between Liquidity

question 9

Multiple Choice

For a bank,there is always a trade-off problem between liquidity and:

• A)risk exposure.
• B)revenue generation.
• C)profitability.
• D)efficiency.
• E)None of the options is correct.

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Definitions:

Bounded Rationality

The concept that decision-making is limited by the information available, cognitive limitations of the mind, and the time available to make the decision.

Mental Shortcuts

Cognitive strategies or heuristics that the mind uses to make decisions or judgments quickly.

Representativeness Heuristic

A cognitive shortcut that involves making judgments based on how well something matches with stereotypes or prototypes in one's mind.

Cognitive Development

The process of growth and change in intellectual/mental abilities such as thinking, reasoning, and understanding, across the lifespan, influenced by genetics and environmental factors.