__________ is the risk that the FI will be required to make a payment when the intermediary has only long-term assets that cannot be disposed of quickly without a capital loss.
A)Default risk
B)Exchange rate risk
C)Interest rate risk
D)Liquidity risk

Question

Quizplus · Accepted Answer

Liquidity risk refers to the risk that the financial institution may not have sufficient funds to meet its financial obligations as they fall due. It arises when an intermediary has only long-term assets that cannot be easily sold to meet short-term payment needs or when the market for the assets is illiquid.

__________ Is the Risk That the FI Will Be Required