Unit 6

Credit risk refers to the risk of...

• illiquidity

• management failure

• counterparty loss

• borrower non-payment

Liquidity risk refers to the...

• inability of banks to maintain collateral

• inability of banks to meet their obligations

• difficulty of creating liquidity

• poor monitoring of borrowers

When banks create more liquidity, they become more...

• illiquid

• liquid

• solvent

• responsible

Bank liquidity creation refers to funding...

• assets with wholesale funds

• liquid assets with illiquid liabilities

• illiquid assets with liquid liabilities

• mortgages with equity

The global financial crisis of 2007-2009 emphasised that liquidity risk can be...

• a national threat

• system-wide

• easy to overcome

• bank-specific

The ___ committee is usually in charge of

liquidity risk management

• collateral value

• risk

• liquidity

• asset-liability

Systemic liquidity risk refers to...

• the contagion of liquidity risk from one bank to many

• the contagion of liquidity risk to foreign banks

• how the banking system manages liquidity risk

• liquidity risk of IT systems in banks

Which of the following is NOT a form of wholesale funding?

• interbank loans

• retail deposits

• repurchase agreements

• debt securities issued for money market funds

Due to the excess liquidity risk observed during the global financial crisis, regulators introduced the...

• CAR and LEQ

• BIS and BCBS

• LCR and NSFR

• MiFID 2

Since the financial crisis, banks' reliance on wholesale funding has...

• increased

• decreased

• stayed the same