Which of the Following Statements Is True

question 3

Multiple Choice

Which of the following statements is true?

• A)The liquidity index compares the liquidity of a single institution with the industry average and thus measures the liquidity risk of that particular institution.
• B)The liquidity index provides guidance for FIs on how much liquidity they should hold on a seasonal basis.
• C)The liquidity index measures the potential losses an FI could suffer if new market entrants take away market share from the existing institutions.
• D)The liquidity index measures the potential losses an FI could suffer from a sudden disposal of assets compared to the mount it would receive at a fair market value established under normal sales conditions.

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Definitions:

Internal Control Objectives

The goals aimed at ensuring the reliability of financial reporting, compliance with laws and regulations, and effectiveness of operations.

Financial Reports

Documents that provide an overview of a company's financial condition, including balance sheets, income statements, and statements of cash flows.

Applicable Laws

The set of relevant laws and regulations that apply within the jurisdiction of a business operation or transaction.

Sarbanes-Oxley Act

A U.S. law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to securities laws.