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Which of the following statements is FALSE? A. The liquidity index is always a value between 0 and 1. B. Liability side liquidity risk arises

Which of the following statements is FALSE?

A.

The liquidity index is always a value between 0 and 1.

B.

Liability side liquidity risk arises from transactions whereby a creditor, depositor, or other claim holder demands cash in exchange for the claim.

C.

Heavy amounts of loan commitments to assets may reflect a heavy amount of potential liquidity needs in the future.

D.

Even with liquidity planning, net deposit withdrawals and/or the exercise of loan commitments can pose significant liquidity problems for banks.

E.

Hedge funds are not susceptible to liquidity risk or a liquidity crisis.

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