The central elements of liquidity risk isare

Question

Quizplus · Accepted Answer

Both option B and C are central elements of liquidity risk. The speed at which an asset can be sold is important because, in times of crisis or when there is a need for cash, the bank must be able to quickly convert assets into cash. However, it is also important that the asset does not lose much of its value at the time of conversion because this can result in losses to the bank. Therefore both elements are important to manage liquidity risk. Option A is not necessarily a central element but can be a factor to consider depending on the specific situation. Option D is not a desirable element because the bank may be forced to sell an asset at a loss if it cannot find a buyer at a reasonable price.

The Central Elements of Liquidity Risk Isare