Funding Risk Is Best Defined As

question 60

Multiple Choice

Funding risk is best defined as:

• A)the risk of an ADI being unable to meet their financial obligations as they fall due
• B)the risk the ADI will not be able to settle their payment system obligations
• C)the risk of an ADI loss resulting from a borrower failing to make its agreed loan payments
• D)the risk that the ADI cannot continue to fund their assets, such as the inability to roll-over maturing debts
• E)the chance of losses arising from unexpected movements in a market variable.

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Definitions:

Cash Flows

The aggregate of all monetary exchanges into and out of a business endeavor, directly affecting its operational cash levels.

Discount Rate

The interest rate used in discounted cash flow forecasts to decipher the present value of prospective cash flows.

Present Value

Today’s fiscal equivalent of money anticipated in the future or sequences of cash inflows, discounted using a specified rate of return.

Today's Dollars

Refers to the value of money in terms of the purchasing power of the current year, accounting for inflation.