17-9 Liquidity risk for an FI includes the possibility of an unexpected inflow of funds.

Question

Quizplus · Accepted Answer

Liquidity risk refers to the risk that an FI may not be able to meet its obligations as they come due without incurring unacceptable losses. An unexpected inflow of funds can also create liquidity risk as the FI may struggle to effectively use these funds and may not have the necessary resources readily available to invest or lend them. Therefore, the statement is true.

17-9 Liquidity Risk for an FI Includes the Possibility of an Unexpected