Which of the following could lead to a bank's failure, even if the bank has positive net worth?
a. The bank may encounter difficulty selling its government bonds.
b. Most of the bank's liabilities are illiquid.
c. A bank with positive net worth cannot fail.
d. The bank may encounter difficulty borrowing reserves from the Federal Reserve.
e. Most of the bank's assets are illiquid.
E
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What is the difference between price discrimination and other forms of discrimination?
What will be an ideal response?
Banks face the problem of ________ in loan markets because bad credit risks are the ones most likely to seek bank loans
A) adverse selection B) moral hazard C) moral suasion D) intentional fraud
The financial system provides risk sharing by allowing
A) borrowers to obtain funds either directly or indirectly. B) savers to earn interest tax-free. C) borrowers to convert liabilities into assets. D) savers to hold many assets.
If the U.S. purchases oil from Venezuela, what is the effect in the foreign-exchange market?
A. It will increase demand for U.S. dollars. B. It will decrease demand for U.S. dollars. C. It will increase supply of U.S. dollars. D. It will decrease supply of U.S. dollars.