Banks Face Liquidity Risk Because

question 62

Multiple Choice

Banks face liquidity risk because

• A) they can have difficulty meeting their depositor's demands to withdraw money.
• B) they are unable to borrow from the Federal Reserve.
• C) households and businesses may seek to borrow a large amount of funds in a short period of time.
• D) governments tend to run high budget deficits.

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Definitions:

Confidence Interval

A range of values that is believed to contain an unknown population parameter, calculated from a given set of sample data.

Sample Variance

A statistical measure of the dispersion of observations in a sample dataset around the sample mean.

T Distribution

A family of probability distributions that can be used to develop an interval estimate of a population mean whenever the population standard deviation s is unknown and is estimated by the sample standard deviation s.

Variance

A measure of the spread between numbers in a data set, indicating how much the numbers differ from the mean.