Which of the following are measures of liquidity risk
I. Liquidity Coverage Ratio
II. Net Stable Funding Ratio
III. Book Value to Share Price
IV. Earnings Per Share
A . III and IV
B . I and II
C . II and III
D . I and IV
Answer: B
Explanation:
In December 2009 the BIS came out with a new consultative document on liquidity risk.
Given the events of 2007 – 2009, it has been clear that a key characteristic of the financial crisis was the inaccurate and ineffective management of liquidity risk
The paper two separate but complementary objectives in respect of liquidity risk management: The first objective relates to the short-term liquidity risk profile of institution, and the second objective is to promote resiliency over longer-term time horizons.
The paper identifies the following two ratios – you should be aware of these – though I am not sure if these will show up in the PRMIA exam:
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