Takedown or Draw-Down Risk in a Loan Commitment Exposes the FI

question 32

Multiple Choice

Takedown or draw-down risk in a loan commitment exposes the FI to:

• A)immediate liquidity risk
• B)basis and spread risk
• C)externality effects
• D)future liquidity risk

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Definitions:

Volley Principle

A theory in neuroscience suggesting that groups of neurons can produce a higher frequency of action potentials if they fire in sequence rather than singly.

Signal-Detection Theory

A theory that explores how decisions are made under conditions of uncertainty, typically in the context of detecting weak or ambiguous signals amidst noise.

Physical Intensity

Refers to the magnitude or strength of a physical quantity (e.g., sound, light).

Sensory Adaptation

The process by which sensory receptors become less sensitive to constant or unchanging stimuli over time.