Liquidity Risk Can Only Arise on the Asset Side of an FI's

question 19

True/False

Liquidity risk can only arise on the asset side of an FI's balance sheet as this means that the FI does not hold enough liquid assets such as cash or liquid securities.

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Definitions:

Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its assets in generating sales revenue; the higher the ratio, the more efficiently assets are being used.

Additions And Improvements

Costs incurred to increase the operating efficiency, productive capacity, or useful life of a plant asset.

Accumulated Depreciation

The total depreciation expense that has been charged against an asset since it was acquired.

Original Cost

The initial purchase price or cost of acquiring an asset before any depreciation, amortization, or impairment costs are deducted.