Question: Which of the following statements is correct? A. A decrease in the DI's stock price caused by market factors is a potential cause of liquidity

Which of the following statements is correct?

A. A decrease in the DI's stock price caused by market factors is a potential cause of liquidity risk for a DI.

B. Life insurance companies is least likely to be exposed to liquidity risk.

C. Fire-sale price refers to the maximum price that will be received on sale of an asset irrespective of the time of sale.

D. The largest banks with access to the money market and other non-deposit markets for funds rely on purchased liquidity management to deal with the risk of cash shortfalls.

E. A disadvantage of using stored liquidity management to manage a FI's liquidity risk is loss of flexibility as a result of dependence upon purchased liabilities.

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