CRO Liquidity Risk Management 2

Question 1

The Net Stable Funding Ratio (NSFR) requires that:

Accepted Answer

Available stable funding exceeds required stable funding over a 1-year horizon

Answer

Liquid assets exceed liabilities over a 30-day period

Answer

Short-term borrowings do not exceed 25% of total funding

Answer

The current ratio remains above 1.5 at all times

Question 2

A 'cash flow gap' analysis in liquidity management measures:

Accepted Answer

The mismatch between cash inflows and outflows across time buckets

Answer

The difference between operating income and net income

Answer

The gap between planned and actual capital expenditures

Answer

The difference between regulatory and economic capital requirements

Question 3

Which of the following BEST describes 'contingent liquidity risk'?

Accepted Answer

Liquidity risk arising from contractually committed but undrawn credit lines

Answer

Liquidity risk that has already materialized and caused a cash shortfall

Answer

Liquidity risk from a specific business unit's operations

Answer

Liquidity risk arising solely from foreign currency transactions

Question 4

What is the primary purpose of an institution's Contingency Funding Plan (CFP)?

Accepted Answer

To provide a documented strategy for managing severe liquidity stress events

Answer

To plan for organic growth of the loan portfolio

Answer

To establish daily cash management procedures for normal operations

Answer

To comply with anti-money laundering regulations

Question 5

When calculating the Liquidity Coverage Ratio (LCR), which of the following represents a cash OUTFLOW?

Accepted Answer

Run-off of retail deposits under stress assumptions

Answer

Receipt of principal on maturing government bonds

Answer

Collateral posted by counterparties to the institution

Answer

Central bank lending facility drawdowns by the institution

Question 6

What is 'intraday liquidity risk'?

Accepted Answer

Risk of being unable to meet payment and settlement obligations during the business day

Answer

Risk that daily trading activities cause losses exceeding a single day's revenue

Answer

Risk from liquidity shortfalls that resolve within 24 hours automatically

Answer

Risk from overnight interest rate changes affecting short-term borrowings

Question 7

Which of the following funding sources is MOST stable for liquidity management purposes?

Accepted Answer

Retail deposits with established customer relationships

Answer

Wholesale funding from money market funds

Answer

Secured repo funding with short-term maturities

Answer

Commercial paper programs with rolling maturities