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28 May, 18:18

The risk that an unanticipated increase in liability withdrawals may cause an fi to have to sell assets at fire sale prices is an example of

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  1. 28 May, 18:38
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    E) liquidity risk

    Explanation:

    FI = financial institution

    Liquidity risk refers to the risk that a business or a financial institution will not be able to meet its short term financial obligations.

    Usually liquidity risks are caused by a business or financial institution not being able to convert assets into cash without losing money. For example, a business that needs to pay interests on a bond may decide to sell some merchandise at a price below cost in order to have the money on time.
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