Question
Which of the following statements is FALSE? A. Financing requirement is the financing gap minus the liquid assets. B. A positive financing gap implies that
Which of the following statements is FALSE?
A. | Financing requirement is the financing gap minus the liquid assets. | |
B. | A positive financing gap implies that the bank must borrow funds or rely on liquid assets to fund the non-liquid assets. | |
C. | A liquidity plan requires forward planning so that an optimal mix of funding can be implemented to reduce costs and unforeseen withdrawals. | |
D. | The lower is the liquidity index, the less liquidity the bank has on its balance sheet. | |
E. | A rising financing gap on a daily basis over a period of time may indicate future liquidity problems due to increased deposit withdrawals and/or increased exercise of loan commitments. |
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