Which of the following is not a potential cause of liquidity risk for a DI?
A) A decrease in the DI's stock price caused by market factors.
B) An increase in requests to fund large amounts of loan commitments.
C) A decrease in the availability of short-term borrowed funds.
D) An increase in requests by depositors to withdrawal large amounts of deposits.

Question

Quizplus · Accepted Answer

A decrease in the DI's stock price caused by market factors would not directly affect the DI's liquidity as it pertains to the ability to meet depositors' demands for withdrawals or funding loan commitments. The other options all could potentially create liquidity risk for a DI.

Which of the Following Is Not a Potential Cause of Liquidity