Which of the Following Items May Expose an FI to Liquidity

question 74

Multiple Choice

Which of the following items may expose an FI to liquidity risk?

• A)$500 000 in demand deposits and $100 000 in overnight deposits made by another FI
• B)$500 000 in demand deposits and $50 000 in credit line facilities
• C)$500 000 in demand deposits, $100 000 in loan commitments and $50 000 in short-term securities
• D)$500 000 in demand deposits, $100 000 in overnight deposits made by another FI and $50 000 in credit line facilities

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Definitions:

Dollar Denominated Bonds

Bonds issued in the United States that are payable in U.S. dollars, irrespective of the issuer's nationality.

Eurobonds

Bonds issued in a currency other than the home currency of the country or market in which it is issued, often used by companies to raise capital in international markets.

Foreign Bonds

These are bonds issued in a domestic market by a foreign entity, in the domestic market's currency, as a way for the issuer to raise capital from investors in that market.

Foreign Government

The governing authority of a nation, state, locality, or community outside of one's own country.