Scenario Analysis Refers to the Part of a Bank's Liquidity

question 27

Multiple Choice

Scenario analysis refers to the part of a bank's liquidity policy that caters for:

• A)a range of predictable events, to ensure that the FI can operate under these operating conditions
• B)worst-case events only, to ensure how worst-case events affect the FI's operating conditions
• C)the most likely scenario, to ensure that the FI's liquidity policy is still valid
• D)a range of specific events, to ensure that the FI can operate under a wide spectrum of operating conditions

---

Definitions:

Preoperational

A stage in Jean Piaget's theory of cognitive development, where children aged 2 to 7 years old engage in symbolic play and struggle with logic and taking the perspective of others.

Sensorimotor

The stage in Piaget's theory of cognitive development (birth to about 2 years) where infants learn about the world primarily through their senses and actions.

Centration

A cognitive limitation in young children's thinking, marked by focusing on one aspect of a situation while neglecting others, characteristic of the preoperational stage.

Conservation Skills

Cognitive abilities that enable a child to understand that quantity or amount does not change when its form or appearance is altered, a concept developed by Jean Piaget.