7-81 the Risk That Many Depositors Withdraw Their Funds at Once

question 93

Multiple Choice

7-81 The risk that many depositors withdraw their funds at once is

• A)credit risk.
• B)sovereign risk.
• C)currency risk.
• D)liquidity risk.
• E)interest rate risk.

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Definitions:

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome.

Investing Activities

Activities involving the buying and selling of long-term assets and investments, excluding those considered as cash equivalents.

Financing Activities

Activities that result in changes in the size and composition of the contributed equity and borrowings of an entity, often reflected on the cash flow statement.

Statement Of Cash Flows

A financial report that shows the cash inflows and outflows from operating, investing, and financing activities over a period.