Question

1. Banks face liquidity risk because

A) they can have difficulty meeting their depositor’s demands to withdraw money.

B) they are unable to borrow from the Federal Reserve.

C) households and businesses may seek to borrow a large amount of funds in a short period of time.

D) governments tend to run high budget deficits.

Answer 1

liquidity risk faced by bank is happened when banks are not in condition to allow depositor to withdraw money.

Step-by-step explanation:

liquidity risk faced by bank is happened when banks are not in condition to allow depositor to withdraw money.

when borrowed money from any individual, investment or legal institution and make this as a high liabilities and return to that if bank is not able to return the amount to its depositor when they are in need then at that time bank face risk in liquidity