Please answer the following questions correctly. Thank you 1. If a bank has to r

ID: 2598817 • Letter: P

Question

Please answer the following questions correctly. Thank you

1. If a bank has to raise liquidity by selling off loans on short notice, the prices on such loan sales would be termed __________ prices.

Select one:

a. fire-sale

b. maximum liquidity

c. deposit drain

d. face value

e. book value

2. A currency swap is:

Select one:

a. an exchange of floating-rate payments for fixed-rate payments.

b. an exchange of one currency for another currency in the spot exchange market.

c. an exchange of interest payments denominated in one currency for interest payments denominated in another currency.

d. an exchange of debt covenant terms in one country for those in another country.

3. When a bank relies on a policy of "purchased liquidity," it will generally be using more expensive funds.

Select one:

True

False

1. If a bank has to raise liquidity by selling off loans on short notice, the prices on such loan sales would be termed fire-sale prices.

Answer is option (a)

2. A currency swap is an exchange of interest payments denominated in one currency for interest payments denominated in another currency.

Answer is option (c)

3. When a bank relies on a policy of "purchased liquidity," it will generally be using more expensive funds. True