Question 1

Which of the following statements is true?

Accepted Answer

A) A net liquidity statement focuses on the sources of liquidity and thus provides a measure of an FI's available liquidity. 
B) A net liquidity statement list focuses on the uses of liquidity and thus provides a measure of an FI's liquidity needs. 
C) A net liquidity statement lists sources and uses of liquidity and thus provides a measure of an FI's net liquidity position. 
D) None of the given answers. 
A) A net liquidity statement focuses on the sources of liquidity and thus provides a measure of an FI's available liquidity. 
B) A net liquidity statement list focuses on the uses of liquidity and thus provides a measure of an FI's liquidity needs. 
C) A net liquidity statement lists sources and uses of liquidity and thus provides a measure of an FI's net liquidity position. 
D) None of the given answers.

Question 2

Net deposit drains refer to the amount by which cash withdrawals:

Accepted Answer

A) are less than additions-this is a cash outflow. 
B) are less than additions-this is a cash inflow. 
C) exceed additions-this is a cash outflow. 
D) exceed additions-this is a cash inflow. 
A) are less than additions-this is a cash outflow. 
B) are less than additions-this is a cash inflow. 
C) exceed additions-this is a cash outflow. 
D) exceed additions-this is a cash inflow.

Question 3

An open-end fund is defined as an investment fund that sells:

Accepted Answer

A) an elastic number of shares to outside investors. 
B) a fixed number of shares to an elastic number of outside investors. 
C) an elastic number of shares to outside investors, but that never buys back any of these shares. 
D) a fixed number of shares to an elastic number of outside investors, but that never buys back any of these shares. 
A) an elastic number of shares to outside investors. 
B) a fixed number of shares to an elastic number of outside investors. 
C) an elastic number of shares to outside investors, but that never buys back any of these shares. 
D) a fixed number of shares to an elastic number of outside investors, but that never buys back any of these shares.

Question 4

Which of the following statements is true?

Accepted Answer

A) The financing requirement is the financing gap plus an FI's liquid assets. 
B) The financing requirement is the financing gap minus an FI's liquid assets. 
C) The financing requirement is the financing gap multiplied by an FI's liquid assets. 
D) The financing requirement is the financing gap divided by an FI's liquid assets. 
A) The financing requirement is the financing gap plus an FI's liquid assets. 
B) The financing requirement is the financing gap minus an FI's liquid assets. 
C) The financing requirement is the financing gap multiplied by an FI's liquid assets. 
D) The financing requirement is the financing gap divided by an FI's liquid assets.

Question 5

What are the main components of a liquidity plan? Discuss the vital role such a plan plays in reducing liquidity risk?

Accepted Answer

A LIQUIDITY PLAN REQUIRES FORWARD PLANNI

Question 6

Which of the following is not a component of liquidity planning?

Accepted Answer

A) A summary of the size of potential net deposit drains over various time horizons. 
B) Detailed list of funds providers who have seasonal patterns of funds usage. 
C) A calculation of the value of assets at fire-sale prices relative to the fair market value of those assets. 
D) A detailed itemisation of managerial responsibilities. 
A) A summary of the size of potential net deposit drains over various time horizons. 
B) Detailed list of funds providers who have seasonal patterns of funds usage. 
C) A calculation of the value of assets at fire-sale prices relative to the fair market value of those assets. 
D) A detailed itemisation of managerial responsibilities.

Question 7

Consider a mutual fund with 100 shareholders who each invested $10 for a total of $1000.If the assets of the mutual fund are worth $900, what is the net asset value for each one of the mutual fund shares?

Accepted Answer

A) $0.9 
B) $9 
C) $90 
D) $10 
A) $0.9 
B) $9 
C) $90 
D) $10

Question 8

Which of the following statements is true?

Accepted Answer

A) An FI can manage a drain on deposits or an exercise of a loan commitment in two major ways, these being purchased liquidity management and stored liquidity management. 
B) Traditionally, FI managers have relied on stored liquidity management as the primary mechanism of liquidity management. 
C) Today, there is a higher reliance on purchased liquidity management. 
D) All of the listed options are correct. 
A) An FI can manage a drain on deposits or an exercise of a loan commitment in two major ways, these being purchased liquidity management and stored liquidity management. 
B) Traditionally, FI managers have relied on stored liquidity management as the primary mechanism of liquidity management. 
C) Today, there is a higher reliance on purchased liquidity management. 
D) All of the listed options are correct.

Question 9

Trend liquidity planning calculates an FI's liquidity need as the simple difference between the FI's liquid assets and its volatile sources of funds.

Accepted Answer

A) True 
 B)False

Question 10

The aim of open market transactions is to influence the level of liquidity in the market.

Accepted Answer

A) True 
 B)False

Question 11

The maturity ladder model allows a comparison of cash inflows and cash outflows over a series of specified time periods.

Accepted Answer

A) True 
 B)False

Question 12

As part of the Basel III liquidity reforms the RBA will establish a secure committed liquidity facility.

Accepted Answer

A) This is necessary due to the shortage of capital required to be held by FIs. 
B) This is necessary due to the shortage of Australian government debt, T-bonds and T-notes, used in open market operations. 
C) This is necessary due to the shortage of international funds to purchase repos. 
D) All of the listed options are correct. 
A) This is necessary due to the shortage of capital required to be held by FIs. 
B) This is necessary due to the shortage of Australian government debt, T-bonds and T-notes, used in open market operations. 
C) This is necessary due to the shortage of international funds to purchase repos. 
D) All of the listed options are correct.

Question 13

Which of the following statements is true?

Accepted Answer

A) A positive financing gap means that the FI must fund it by using its cash and liquid assets or by raising funds in the money market. 
B) A negative financing gap means that the FI must fund it by using its cash and liquid assets or by raising funds in the money market. 
C) A positive financing gap means that the FI has excess liquidity. 
D) A negative financing gap means that the FI is in need of liquidity. 
A) A positive financing gap means that the FI must fund it by using its cash and liquid assets or by raising funds in the money market. 
B) A negative financing gap means that the FI must fund it by using its cash and liquid assets or by raising funds in the money market. 
C) A positive financing gap means that the FI has excess liquidity. 
D) A negative financing gap means that the FI is in need of liquidity.

Question 14

An FI can manage a drain on deposits or an exercise of a loan commitment in two major ways, these being purchased liquidity management and stored liquidity management.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following equations correctly defines an FI's financing requirements?

Accepted Answer

A) Average loans - average deposits 
B) Average deposits - average loans 
C) Average loans - average deposits + liquid assets 
D) Financing gap - liquid assets 
A) Average loans - average deposits 
B) Average deposits - average loans 
C) Average loans - average deposits + liquid assets 
D) Financing gap - liquid assets

Question 16

Which of the following is false?

Accepted Answer

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. 
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.

Question 17

Net asset value is the:

Accepted Answer

A) product of the price at which a managed fund's shares are sold and the number of outstanding shares. 
B) price at which a managed fund's shares are sold. 
C) value of an investor's holding in managed fund's shares. 
D) None of the listed options are correct. 
A) product of the price at which a managed fund's shares are sold and the number of outstanding shares. 
B) price at which a managed fund's shares are sold. 
C) value of an investor's holding in managed fund's shares. 
D) None of the listed options are correct.

Question 18

Which of the following items may expose an FI to liquidity risk?

Accepted Answer

A) $500 000 in demand deposits and $100 000 in overnight deposits made by another FI. 
B) $500 000 in demand deposits and $50 000 in credit line facilities. 
C) $500 000 in demand deposits, $100 000 in loan commitments and $50 000 in short-term securities. 
D) $500 000 in demand deposits, $100 000 in overnight deposits made by another FI and $50 000 in credit line facilities. 
A) $500 000 in demand deposits and $100 000 in overnight deposits made by another FI. 
B) $500 000 in demand deposits and $50 000 in credit line facilities. 
C) $500 000 in demand deposits, $100 000 in loan commitments and $50 000 in short-term securities. 
D) $500 000 in demand deposits, $100 000 in overnight deposits made by another FI and $50 000 in credit line facilities.

Question 19

The Bank for International Settlements requires FIs to measure their liquidity positions under normal market conditions only.

Accepted Answer

A) True 
 B)False

Question 20

An investment fund that sells a fixed number of shares in the fund to outside investors is called:

Accepted Answer

A) open-end fund. 
B) closed-end fund. 
C) fixed fund. 
D) fixed number fund. 
A) open-end fund. 
B) closed-end fund. 
C) fixed fund. 
D) fixed number fund.

Which of the following statements is true?

Net deposit drains refer to the amount by which cash withdrawals:

An open-end fund is defined as an investment fund that sells:

Which of the following statements is true?

What are the main components of a liquidity plan? Discuss the vital role such a plan plays in reducing liquidity risk?

Which of the following is not a component of liquidity planning?

Consider a mutual fund with 100 shareholders who each invested $10 for a total of $1000.If the assets of the mutual fund are worth $900, what is the net asset value for each one of the mutual fund shares?

Which of the following statements is true?

Trend liquidity planning calculates an FI's liquidity need as the simple difference between the FI's liquid assets and its volatile sources of funds.

The aim of open market transactions is to influence the level of liquidity in the market.

The maturity ladder model allows a comparison of cash inflows and cash outflows over a series of specified time periods.

As part of the Basel III liquidity reforms the RBA will establish a secure committed liquidity facility.

Which of the following statements is true?

An FI can manage a drain on deposits or an exercise of a loan commitment in two major ways, these being purchased liquidity management and stored liquidity management.

Which of the following equations correctly defines an FI's financing requirements?

Which of the following is false?

Net asset value is the:

Which of the following items may expose an FI to liquidity risk?

The Bank for International Settlements requires FIs to measure their liquidity positions under normal market conditions only.

An investment fund that sells a fixed number of shares in the fund to outside investors is called:

Why Are Financial Institutions Special

The Financial Services Industry: Depository Institutions

The Financial Services Industry: Other Financial Institutions

Risk of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: The Duration Model

Managing Interest Rate Risk Using Off Balance Sheet Instruments

Credit Risk I: Individual Loan Risk

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters

Exam 14: Liquidity Risk

Which of the following statements is true?

Net deposit drains refer to the amount by which cash withdrawals:

An open-end fund is defined as an investment fund that sells:

Which of the following statements is true?

What are the main components of a liquidity plan? Discuss the vital role such a plan plays in reducing liquidity risk?

Which of the following is not a component of liquidity planning?

Consider a mutual fund with 100 shareholders who each invested $10 for a total of $1000.If the assets of the mutual fund are worth $900, what is the net asset value for each one of the mutual fund shares?

Which of the following statements is true?

Trend liquidity planning calculates an FI's liquidity need as the simple difference between the FI's liquid assets and its volatile sources of funds.

The aim of open market transactions is to influence the level of liquidity in the market.

The maturity ladder model allows a comparison of cash inflows and cash outflows over a series of specified time periods.

As part of the Basel III liquidity reforms the RBA will establish a secure committed liquidity facility.

Which of the following statements is true?

An FI can manage a drain on deposits or an exercise of a loan commitment in two major ways, these being purchased liquidity management and stored liquidity management.

Which of the following equations correctly defines an FI's financing requirements?

Which of the following is false?

Net asset value is the:

Which of the following items may expose an FI to liquidity risk?

The Bank for International Settlements requires FIs to measure their liquidity positions under normal market conditions only.

An investment fund that sells a fixed number of shares in the fund to outside investors is called:

Why Are Financial Institutions Special

The Financial Services Industry: Depository Institutions

The Financial Services Industry: Other Financial Institutions

Risk of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: The Duration Model

Managing Interest Rate Risk Using Off Balance Sheet Instruments

Credit Risk I: Individual Loan Risk

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters