Which of the following statements is TRUE?

Select one:

a. FIs such as depository institutions are exposed to liquidity risk because the

relatively illiquid nature of their liabilities.

b. A liquid asset converts to cash quickly, but will require a deep discount from market

value.

Excessive liquidity can cause an Fl's inability to meet required payments on liability

claims and, at the extreme, in insolvency.

d. When trying to reduce the risk of a liquidity crisis for an FI, one approach is to

efficiently manage liquid asset positions.

e. All of the statements are true.

f. None of the statements are true.