Which of the Following Is False

question 42

Multiple Choice

Which of the following is false?

• A)Appropriate liquidity planning can lower the cost of funds of an FI and thus increase its profitability.
• B)Appropriate liquidity planning can maximise the amount of excess cash reserves.
• C)Appropriate liquidity planning can limit an FI's liquidity risk.
• D)None of the listed options are correct.

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Definitions:

Net Present Value

A financial metric that calculates the present value of all future cash flows (positive and negative) expected from an investment, discounted back to the present.

Single Variable

A single variable refers to an isolated factor in an experiment or equation, allowing for analysis or manipulation to understand its effects.

Sensitivity Analysis

A financial model analysis technique that determines how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Projected Net Present Value

An estimate of the net present value (NPV) of a project or investment based on forecasted cash flows.