FIs Are Particularly Vulnerable to Sudden and Unexpected Demand for Funds.Liquidity

question 40

Multiple Choice

FIs are particularly vulnerable to sudden and unexpected demand for funds.Liquidity regulations are imposed for all of the following reasons, except to:

• A)ensure that authorised DIs have sufficient liquidity
• B)prevent liquidity problems and possible contagion effects that may spread to other FIs
• C)increase liquidity for prudential management
• D)ensure that authorised DIs have sufficient capital

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Definitions:

Elastic Fibers

Protein fibers in connective tissue that have the ability to stretch and return to their original shape, contributing to the elasticity of organs and tissues.

Reticular Fibers

Fine, branching fibers composed of collagen and glycoproteins, forming a supportive network in various tissues.

Tensile Strength

The maximum stress that a material can withstand while being stretched or pulled before failing or breaking.

Gas Exchange

The biological process through which organisms exchange oxygen and carbon dioxide with their environment, critical for respiration.