What is different about liquidity risk compared with risks such as market, credit, and operational?

Answers

Answer 1

Liquidity risk is different from market risk, credit risk, and operational risk in several ways: Nature of the Risk, Focus on Asset Convertibility, Time Horizon, Impact on Pricing and Value, Mitigation Strategies.

Nature of the Risk: Liquidity risk relates to the ease with which an asset can be bought or sold in the market without causing significant price changes. Market risk refers to the potential for losses due to market fluctuations, credit risk refers to the risk of default by borrowers or counterparties, and operational risk pertains to the risk of losses arising from internal processes, systems, or human errors.

Focus on Asset Convertibility: Liquidity risk specifically focuses on the ability to convert assets into cash quickly and at a fair price. It considers the potential impact of low trading volumes, large bid-ask spreads, or limited market depth on an asset's saleability. Market risk, credit risk, and operational risk are not directly concerned with the asset's convertibility.

Time Horizon: Liquidity risk often involves short-term considerations and the immediate ability to meet financial obligations. Market risk, credit risk, and operational risk may have short, medium, or long-term implications depending on the specific circumstances.

Impact on Pricing and Value: Liquidity risk directly affects the pricing and value of an asset. Limited liquidity can result in wider bid-ask spreads, lower trading volumes, and potentially lower prices. Market risk relates to changes in the overall market value of an asset, credit risk affects the perceived creditworthiness and interest rates charged to borrowers, and operational risk can lead to financial losses or reputational damage.

Mitigation Strategies: Mitigating liquidity risk often involves maintaining sufficient cash reserves, diversifying funding sources, and establishing contingency plans for accessing liquidity during stress periods. Market risk, credit risk, and operational risk have their own specific mitigation strategies tailored to the nature of each risk.

In summary, liquidity risk is distinct from market risk, credit risk, and operational risk due to its focus on asset convertibility, short-term considerations, impact on pricing and value, and specific mitigation strategies aimed at managing liquidity constraints.

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Related Questions

Describe an economic force that encourages people to move into metropolitan areas.

Answers

An economic force that encourages people to move into metropolitan areas is unemployment.

What is unemployment?

Unemployment is the inability of a person who is willing to work to find employment.

Unemployment is one of the economic forces, including inflation and fiscal policies, that encourage people to migrate to some areas.

Thus, an economic force that encourages people to move into metropolitan areas is unemployment.

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Which of the following is a document provided to external vendors that are competing for a​ project?
A.
Invoice
B.
Grant application
C.
Statement of cash flows
D.
Request for proposal
E.
Balance sheet

Answers

The document provided to external vendors that are competing for a project is a (D) Request for Proposal (RFP).

A Request for Proposal (RFP) is a document that an organization sends to potential vendors inviting them to submit a proposal for a particular project or program. The RFP typically includes detailed specifications and requirements for the project or program, as well as instructions for submitting the proposal and the evaluation criteria that will be used to select the winning bid.

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The purchase of newly ordered raw materials by Mewah Wangsa Corporation is on the 2nd of April and the goods will be sold on the 20th of July. The payment is on a credit term of 7/10 net 45 . Given RM20,000 monthly sales, total account receivables of RM30,000 and outlays of RM35,000. Determine: i) The length of Mewah Wangsa Corporation's cash cycle. ii) The amount of the cash turnover of the corporation. iii) The amount of minimum operating cash involved. iv) The cost of foregoing cash discount.

Answers

i) The length of Mewah Wangsa Corporation's cash cycle is 80 days.

ii) The cash turnover of the corporation is RM250.

iii) The amount of minimum operating cash involved is RM2,800,000.

iv) The cost of foregoing cash discount is RM6,300.

i) The length of Mewah Wangsa Corporation's cash cycle can be calculated by adding the average collection period and the average payment period.

Average collection period = (Total account receivables / Monthly sales) * 30

= (RM30,000 / RM20,000) * 30

= 45 days

Average payment period = Credit term - Cash discount period

= 45 - 10

= 35 days

Cash cycle length = Average collection period + Average payment period

= 45 + 35

= 80 days

Therefore, Mewah Wangsa Corporation's cash cycle is 80 days.

ii) The cash turnover of the corporation can be calculated by dividing the monthly sales by the length of the cash cycle.

Cash turnover = Monthly sales / Cash cycle length

= RM20,000 / 80

= RM250

The cash turnover of the corporation is RM250.

iii) The amount of minimum operating cash involved is calculated by multiplying the daily outlays by the length of the cash cycle.

Minimum operating cash = Daily outlays * Cash cycle length

= RM35,000 * 80

= RM2,800,000The amount of minimum operating cash involved is RM2,800,000.

iv) The cost of foregoing cash discount is calculated by multiplying the cash discount percentage by the credit term and the monthly sales.

Cost of foregoing cash discount = Cash discount percentage * Credit term * Monthly sales

= (7/100) * 45 * RM20,000

= RM6,300

The cost of foregoing cash discount is RM6,300.

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Fe2O3 + 3 CO → Fe + 3 CO2

Answers

Answer:

product 2FeO3+3CO2

Explanation:

1. If average fixed cost is 40 and average variable cost is 80 for a given output, we then know that average total cost is

Answers

Answer:

120

Explanation:

Average total cost = average fixed cost + average variable cost

average fixed cost = Total fixed cost / quantity

40 + 80 = 120

Fixed costs are costs that do not vary with output. e,g, rent, mortgage payments

average variable cost = total variable cost / quantity

Variable costs are costs that vary with production. Hourly wage costs and payments for production inputs are examples of variable costs

Definition of literature ​

Answers

Answer:

writings in which expression and form, in connection with ideas of permanent and universal interest, are characteristic or essential features, as poetry, novels, history, biography, and essays

Explanation:

Answer:

the art of written works, and is not bound to published sources (although, under circumstances they can be exempt).

Explanation:

1. Which of the following is a dynamic industry covering a wide range of
job roles?
A. Bread and Pastry C. Handicrafts
B. Food and Beverage Service D. Public Director
________ 2. Which is not one of the main goals of Food and Beverage Services?
A. Impart value for money.
B. Promotes the heritage of a country with the use of
indigenous materials and it preserves traditional knowledge and
talents.
C. Provide friendly and welcoming atmosphere.
D. Provide professional, hygienic, and attentive service.
________ 3. Which job titles is similar to Wine maker?
A. Cookbook Author C. Line Chef
B. Food Entrepreneur D. Vineyard Manager
________ 4. Which of the following is NOT the primary duties of Chef?
A. Formulating original recipes
B. Overseeing kitchen management
C. Preparing meals
D. Satisfying patron requests in a timely manner

________ 5. Which career role includes overseeing the entire facility from the
accommodation to food services and be involved in many operations?
A. Baker C. Food and Beverage owner/manager
B. Chef D. Pastry artist
________ 6. Which job title is not similar to Service crew?
A. Bartender C. Front Desk Clerk
B. Culinary Historian D. Housekeeper
________ 7. Which career functions include creating new food and beverage
products, improving food processing methods and performing research for food
manufacturing companies?
A. Clinical Dietician C. Research Chef
B. Food Photographer D. Waiter
________ 8. Which is true about Food and Beverage Services?
A. Contributes a great deal to the profits in hospitality industry
B. Produce things with hands to meet the needs of the people in their
locality without using machines.
C. Refers to the grain-based food industry
D. Transformation of agricultural products into food, or of one form
of food into other forms.

________ 9. Which job title is similar to Food Photographer, Public Relations
Director and Social Media Specialist?
A. Culinary art instructor C. Restaurant Publicist
B. Nutritionist D. Wine Maker
________ 10. Which of the following job titles is included in unique careers?
A. Chef C. Food and Beverage Manager
B. Culinary Arts Instructor D. Service Crew

Answers

2=C because we don't produce beverages and food to welcome friends

Suppose you have a collision involving another car with a single occupant, the driver. It is your fault. No one is seriously hurt, but the other driver chooses to go to the emergency room to be checked out. The medical cost is $1,500. The damage to your car is $3,000, And the damage to the other car is $6,000. You have the following minimum coverage:
Bodily injury liability coverage: $15,000 per person, $30,000 per accident
Property damage liability coverage: $5,000
No collision.

1. How much would your insurance pay and how much would you pay? Explain why.

Answers

Answer:

that would be crease

Explanation:

dsa

An employer can refuse to hire you if you refuse a drug screening test or background check.

Answers

Answer:yes

Explanation:

Answer:

true

Explanation:

which economic advantage does eastern europe enjoy because of its location next to russia?

Answers

Access to Russia’s economic Markets

Tyrrell's small lumber company aims to fulfill the economic foundation of business. What first step must his company take to achieve this goal?
-be a good corporate citizen
-save the environment
-obey the law
-earn profits
-do what is right

Answers

The  first step must his company take to achieve this goal is: earn profit.

What is profit?

Profit is what a person gain from the sell of products after deducting their expenses and other production cost.

In order for the company to achieve their set goals which is to fulfil the economic foundation business they need to first of all earn profits from their business.

Therefore the company needs to earn profit.

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Mutual fund A earned 10 percent while B earned 8 percent. The standard deviations of the returns were 10 percent and 7 percent, respectively. According to the Sharpe ratio, which fund performed better?

Answers

Answer:

Fund B is better

Explanation:

Given:

Return of fund A = 10 %

Return of fund B = 8 %

Standard deviations of A = 10%

Standard deviations of B = 7%

Find:

Which fund better?

Computation:

Sharpe ratio for A = (10-3)/10

Sharpe ratio for A = 0.7  

Sharpe ratio for B = (8-3)/7

Sharpe ratio for B = 0.714

So,

Sharpe ratio for B is higher

Fund B is better

There are a number of different ethical issues you could discuss with your employees. What topics would serve as a good basis for the beginning of the course?

Answers

Hi
I think you should claim there to be racism and blame someone for being racist to you and that WILL show them that you are responsible and want best for them .
Hope this helped
Jeff

The president of state university wants to forecast student enrollments for this academic year based on the following historical data: year enrollments 5 years ago 15,000 4 years ago 16,000 3 years ago 18,000 2 years ago 20,000 last year 21,000 what is the forecast for this year using the naive approach?

Answers

last year 21,000 is the forecast for this year using the naive approach.

A forecast is a method of predicting the future primarily based on the consequences of the preceding information. It includes a detailed evaluation of past and gift traits or activities to expect destiny occasions. It uses statistical equipment and strategies. Therefore, it is also referred to as Statistical evaluation.

A typhoon in October 1859 that triggered the lack of the Royal charter stimulated FitzRoy to expand charts to allow predictions to be made, which he knew as "forecasting the climate", consequently coining the term "weather forecast".

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if demand is not uniform and constant, the stockout risks can be controlled by __________.

Answers

If demand is not uniform and constant, the stockout risks can be controlled by integrating an inventory management system.

A stockout happens when customer demand for a product surpass the amount of inventory held on hand. This occurs when demand exceeds expectations and there is not enough regular inventory or safety stock to fulfill all orders. A stockout can also result from production process halts or delays in the supply chain.

An inventory management system aids in ensuring that the appropriate quantity of inventory is available at the appropriate time to satisfy demand. This can include predicting demand, monitoring inventory levels, using reorder points to prompt restocking, forecasting demand, adjusting production schedules, ordering more inventory as necessary, and using inventory optimization techniques like just-in-time (JIT) or economic order quantity (EOQ) to reduce excess inventory and minimize stockout risks. Businesses can reduce the costs of stockouts, overstocking, and retaining too much inventory while managing the risks associated with unpredictable demand by employing an inventory management system.

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is a measurement of standard of living that includes education and
clean running water.
A. Financial wealth
B. Access to necessities
C. Income
D. Material wealth

Answers

B. Access to necessities
B. Access to nessecites

PLZ PLZ PLZ HELP ME OUT GIVING AWAY MY LAST 16 POINTS FOR THIS!!

The introduction of the credit card was one of the things that led to the creation of database marketing.


False

True

Answers

True it’s true I just did the test

Answer:

True

Explanation:

A credit card allows you to make purchases and pay for them later. In that sense, it's like a short-term loan in market of today's situation this has been revealed.

From this we can conclude that it led to the creation of database in marketing.

The theory of perfectly competitive markets leads to the prediction that the firms in a perfectly competitive industry will:

Answers

The theory of perfectly competitive markets predicts that firms in a perfectly competitive industry will earn zero economic profit in the long-run equilibrium although economic profit may be positive, zero, or negative in short-run equilibrium.

This means that firms will not make any excess profit beyond what is necessary to cover their costs. In the short run, however, economic profit may be positive, zero, or negative depending on various factors such as changes in demand or input prices.

In a perfectly competitive market, all firms are price-takers, meaning they have no market power to influence the price of the product they sell. As a result, they must accept the market price, which is determined by the interaction of supply and demand.

In the long run, firms can enter or exit the market based on the level of profit they are making. If economic profit is positive, new firms will enter the market, increasing supply and driving down prices, until economic profit is zero.

Conversely, if economic profit is negative, some firms will exit the market, reducing supply and driving up prices until economic profit is zero.

Moreover, the theory of perfect competition suggests that firms will be of the same size in the long-run equilibrium since they will all have access to the same technology, inputs, and markets, and will face the same market conditions.

This leads to a situation where there is no incentive for any firm to grow or shrink in size.

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The theory of perfectly competitive markets leads to the prediction that the firms in a perfectly competitive industry will: Explain in 180 words.

a. earn zero economic profit in long-run equilibrium, although economic profit may be positive, zero, or negative in short-run equilibrium.

b. all be exactly the same size in long-run equilibrium.

c. earn zero economic profit in both short-run and long-run equilibrium.

d. earn zero economic profit in short-run equilibrium, although economic profit may be positive, zero, or negative in long-run equilibrium.

If an economist wishes to determine whether there is evidence that mean family income in a community exceeds $50,000, a. either a one-tail or two-tail test could be used with equivalent results. b. a one-tail test should be utilized. c. a two-tail test should be utilized. d. None of the above.

Answers

Answer:

b. a one-tail test should be utilized.

Explanation:

It can be said that the best way for the economist to make this determination would be to use a one-tail test. This is a statistical test in which the critical area of a distribution is one-sided, making it either exceed or fall short of a certain value, but not both as seen in the graph below. Which in this case, the certain value would be $50,000 and the information will be on either side. Thus showing the economist if the mean family income truly exceeds the $50,000

If an economist wishes to determine whether there is evidence that mean family income in a community

In what three ways does the government affect production of goods and services in the US economy?

Answers

Government activity affects the economy in four ways: The government produces goods and services, including roads and national defense. Less than half of federal spending is devoted to the production of goods and services

Baxley Brothers has a DSO of 21 days, and its annual sales are $4,380,000. What is its accounts receivable balance

Answers

The accounts receivable balance of Baxley Brothers would be $317,391.30. Explanation:DSO s:stands for Days Sales Outstanding which is a measure of the average number of days that a company takes to collect its accounts receivables.

To calculate DSO, you can divide the accounts receivable by the total credit sales and then multiply by the number of days in the period.The formula for DSO is as follows:DSO = (Accounts Receivable ÷ Credit Sales) × Number of DaysSo, using the given values:

DSO = 21 daysAnnual Credit Sales = $4,380,000DSO = (Accounts Receivable ÷ Annual Credit Sales) × Number of DaysRearranging this formula, we can solve for Accounts Receivable:Accounts Receivable = (DSO ÷ Number of Days) × Annual Credit SalesAccounts Receivable = (21 ÷ 365) × $4,380,000Accounts Receivable = 0.0575 × $4,380,000Accounts Receivable = $317,391.30Therefore, the accounts receivable balance of Baxley Brothers would be $317,391.30.

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Can someone please help

Can someone please help

Answers

A job is a paid position. While a career is a professional path that a person would undertake in a field to be a professional there.

What are the distinctions between the two?

A job is a paid position of employment that typically requires a set of specific duties and responsibilities to be performed on a regular basis. To me, a job represents a way to earn a living and support oneself, as well as a way to gain experience and skills in a particular field. Getting a job often involves applying for open positions, completing interviews and meeting certain qualifications or requirements. A common way of finding a job is by looking for job openings on various websites, or by networking with people in the industry.

A career, on the other hand, is a longer-term pursuit of a professional path or occupation, often involving a progression of positions or roles within a particular field or industry. To me, a career represents a sense of purpose, growth and development, as well as a way to contribute to the society and make a meaningful impact. Building a career often involves setting goals, acquiring new skills, and working one's way up through the ranks of an organization or industry. A common way of building a career is by developing a professional network, taking on extra responsibilities, and continuously learning and growing.

The main difference between a job and a career is that a job is a temporary position, while a career is a longer-term pursuit. A job is more focused on the present and immediate needs, while a career is more focused on the future and long-term goals. A job may require only basic qualifications, while a career may require more advanced skills and education. A job is often viewed as a means to an end, while a career is often viewed as a calling or a vocation.

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What is the minimum amount due on the following credit card statement?
Money Credit Card Company
Credit Card Holder Account Number
Maurice James 90002002003
Closing Date
5-1-2010
Payment Due Date
5-13-2010
Previous Balance
0.00
Minimum Payment Due
New Balance
202.23
10.00
Credit Line Summary
Total Credit Limit Credit Available
$2,000.00
$1,797.77
New Activity for Maurice James
Posting date Trans. Date
Transactions
4-15-2010 4-15-2010 Store ABC
4-16-2010 4-16-2010 Gas Station
Charge
$130.23
$72.00
2010 Gyron, Inc
$1,797.77
$10
$202.23
$15

What is the minimum amount due on the following credit card statement?Money Credit Card CompanyCredit

Answers

Answer: $10

Explanation: It is in the box labeled Minimum Payment Due

Answer:

$10

Explanation:

What is forms of buisness??

Answers

Answer and Explanation:

Some forms of business are sole proprietorship, partnership, corporation, and s corporation.


Which technology do online stores usually use to present customized content?
Online stores usually use __
technology to present customized content.

Answers

Désolé je ne pourrais pas repondre

Answer:

real time analytics

Explanation:

A mismatch between foreign currency denominated net assets and net liabilities Multiple Choice can be eliminated by constructing a balance sheet hedge. can be eliminated by multiplying the foreign currency value of the asset by the spot exchange rate. can be eliminated by undertaking accounting changes to eliminate translation exposure. none of the options

Answers

Answer:

can be eliminated by constructing a balance sheet hedge.

Explanation:

The mismatch could be occurred at the time when the foreign currency and net liabilities would be removed by preparing a hedge of the balance sheet

So according to the given options, the first option is correct as it represent the mismatch situation

So the rest of the options would be considered wrong as they are not related with the mismatch criteria

Suppose the economy is currently at full employment with aggregate demand curve AD2. A further increase in consumption and investment spending will cause

Answers

An upward shift of the aggregate demand curve to AD3.

A further increase in consumption and investment spending would cause an increase in aggregate demand, leading to an upward shift of the aggregate demand curve from AD2 to AD3. This shift would cause an increase in both real output and the price level, as firms increase production to meet the higher demand.
The increase in consumption and investment spending could be caused by a variety of factors, such as a decrease in taxes or an increase in government spending. However, if the increase in aggregate demand is not met with an increase in aggregate supply, it could lead to inflationary pressures in the economy. Therefore, policymakers need to monitor the balance between aggregate demand and supply to ensure stable economic growth.

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If you want to take advantage of compound interest, what should you do when an investment produces interest?
A.Use the interest to pay your bills.
B.Reinvest the interest.
C.Put the interest in a savings account.
D.Put the interest in a checking account.

Answers

C. Put the interest in a saving account

Answer:

B, Reinvest the interest

ed2020

Unexpected events that drive economic cycles and fluctuations are called economic:________

Answers

Unexpected events that drive economic cycles and fluctuations are called  economic shocks.

Shocks are frequently unpredictable and usually occur as a result of events that are thought to be outside the scope of normal economic transactions. Economic shocks have widespread and long-lasting effects on the economy and are thought to be the root cause of recessions and economic cycles, according to real business cycle theory (RBC).

The term refers to unexpected events that drive economic cycles and fluctuations. Shocks. Economic theories are based on the assumption that economic fluctuations are caused by: the labor force. Economic fluctuations have diminished in frequency and severity in the United States and many other countries over the past 25 years, a phenomenon called the "Great Moderation".

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The coordinates of point T are ​(​0,​5). The midpoint of is ​(6​,​-4). Find the coordinates of point S.

Answers

Answer:

Point S is at (10,-11) :)

Explanation:

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