All of the statements below are not false, except: 1. Changes in interest rates represent a risk for both bor...

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All of the statements below are not false, except: 1. Changes in interest rates represent a risk for both borrowers and inves

The following statements are not associated with Futures, except: 1. Futures are standardised contracts meaning that the gove

When a company contacts a bank and asks for a 3-month forward rate and is quoted by the banks FX dealer AUD/USDO.9560-65 14.

Calculate the market value of a bank bill futures contract with a face value of $1000000, a reported price of $93.25 and 140

Hedging as a risk management technique is used by Hedge funds to provide certainty to future cash flows. Select one: True O F

The company expects to borrow approximately $1 million in three months. The current rate of interest is 6.00% p.a. but is for

If an FRA dealer quotes 6Mv9M 7.25 to 20, this means that the dealer is prepared to: Select one: o a. lend three-month mone

business finance

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Answer 1

Answer #1

The answer is a. Only V.

REASON:

Liquidity means the ready availability of cash. It means that a business or a firm or any institution should have assets that can be readily converted into cash with ease and without any loss in their value.

thus, liquidity is an important consideration not only for the central bank but for other commercial banks and business in the economy.

A business has to ensure that it has sufficient liquid funds available at all times to meet its obligations.Like a business has to make payment to suppliers, meet its expenses etc.

Similarly, a commercial bank has to ensure that it has funds available to pay its depositors who may come on any day to take back their funds.

Hence, liquidity is important for all and not just for central bank.

NOTE: AS PER GUIDELINES ONLY 1ST QUESTION IS ATTEMPTED. ASK OTHER QUESTIONS SEPARATELY.

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Answer 2

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All of the statements below are not false, except: 1. Changes in interest rates represent a risk for both bor...

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