Illiquid financial institutions:
A) have assets that are worth less than their liabilities.
B) do not have immediately available funds to make promised payments
C) have negative net worth.
D) do not accept deposits or make loans to households.

Question

Quizplus · Accepted Answer

Illiquid financial institutions do not have immediately available funds to make promised payments, meaning that they may have long-term investments or assets that cannot easily be converted into cash. This can make it difficult for them to meet their financial obligations in a timely manner. The other options are not necessarily indicative of illiquidity, as some institutions may have assets worth less than their liabilities but still have enough liquid assets to meet their obligations, while negative net worth and not accepting deposits are not directly related to liquidity.

Illiquid Financial Institutions