The BIS Recommends That Depository Institutions Do Which of the Following

question 43

Multiple Choice

The BIS recommends that depository institutions do which of the following to realistically measure liquidity risk?
I. Construct a maturity ladder of funding requirements over both the short and long run.
II. Conduct scenario analyses of the bank's implied liquidity position under different bank and economic conditions.
III. Always keep the loan-to-deposit ratio less than one.

• 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:

Accounting Data

Financial information and records pertaining to a company's operations, financial position, and cash flows.

Market Value Data

Information regarding the price at which an asset is traded on the market, reflecting its current worth as determined by buyers and sellers.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, typically including a balance sheet, income statement, and cash flow statement.

Financial Leverage

The use of borrowed funds to finance the acquisition of assets, with the expectation that the income or capital gains from the assets will exceed the cost of borrowing.