26) Banks are exposed to liquidity funding risk because: They transform liquid deposits (liabilities) to illiquid loans (assets) They have problems meeting their depositors' demands to withdraw money from their accounts They are unable to borrow from the lender of last resort, the central bank A, B and C are all true 27) Which of the following statements is not true: Liquidity black holes arise in situations where liquidity has dried up because everyone wants to sell and nobody wants to buy in a particular market In good economic times with the general price level of assets on the rise, the leveraging cycle allows an investor to increase leverage initially, only to end up with decreased leverage later on Liquidity black holes are an example of irrational exuberance. None of the alternatives 28) Under the third pillar of Basel II (market discipline), a bank is expected to: Report a higher required minimum capital Maintain a closer relationship with regulators Should have a process for assessing their overall capital adequacy Increase their disclosure and be more transparent no