Which of the Following Statements Is True

question 5

Multiple Choice

Which of the following statements is true?

• A) In case of a liquidity crisis, depositors do not need to worry as the RBA will pay out any deficit balances.
• B) In case of a liquidity crisis, any available balances will be divided equally among depositors.
• C) In case of a liquidity crisis, any available balances will be divided proportionally to each depositor's investment.
• D) In case of a liquidity crisis, the 'first comes, first serves' principle holds.

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Definitions:

Fair Value Method

An accounting strategy used to assess the current market value of an asset or liability rather than its historical cost.

Unrealized Loss

A loss that has occurred on paper due to a decrease in the value of an investment or asset, but has not been realized through a transaction.

Fair Value Adjustment

A process of adjusting the book value of an asset or liability to reflect its current market value, used in accounting to ensure the fair presentation of financial statements.

Trading Portfolio

A collection of financial assets, such as stocks or bonds, held by an institution or individual for the purpose of realizing profits from short-term price movements.