How Does Reliance on Purchased Liquidity Rather Than Core Deposits

question 47

Multiple Choice

How does reliance on purchased liquidity rather than core deposits affect a bank?
I. Increases the risk of a liquidity crisis
II. Allows the bank to adjust to deposit drains without affecting bank size
III. Increases overall interest sensitivity of the bank's profits to interest rates

• A)I only
• B)II only
• C)I and II only
• D)II and III only
• E)I,II,and III

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Definitions:

Biological Factors

Aspects relating to the biological systems of an individual that influence or determine behavioral tendencies, physical health, and mental well-being.

Primary Appraisal

An individual's initial evaluation of a situation, determining its potential impact on well-being.

Cognitive Appraisal Model

Lazarus’s theory of how thinking plays a strong role in stress.

Lazarus

Refers to Richard Lazarus, a psychologist known for his theory on stress and emotion, particularly how individual appraisal of a situation affects their emotional reaction.