. Controls should be implemented to reduce risk to: A. zero B. the level at which management believes the risk benefit is less than its cost. C. the level of materiality specified by the external auditors. D. the level of materiality specified by the audit committee. 2. Financial risks A. decrease with time. B. are independent of time. C. cannot be controlled. D. are a function of variabilit

. Controls should be implemented to reduce risk to: A. zero B. the level at which management believes the risk benefit is less than its cost. C. the level of materiality specified by the external auditors. D. the level of materiality specified by the audit committee. 2. Financial risks A. decrease with time. B. are independent of time. C. cannot be controlled. D. are a function of variabilit

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 32P

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Under normal liquidity management, deposit drains and loan commitment disbursement should not cause any major concerns for the financial institution. Major liquidity problems can arise where deposit drains are abnormally large; unexpected abnormal deposit drains (shocks) these may occur for all of the following reasons EXCEPT: a. The recent bankruptcy of a domestic bank sparks fear amoung depositors of a possible similar occurrence at another financial institution. b. The sudden withdrawal of funds by a significant number of depositors due to a major financial crisis taking place in the local economy. c. The sudden change in preference by investors from holding stocks and bonds to certain bank related deposits instruments. d. Speculations of ongoing liquidity problems of a particular financial institution compared to its competitors´. Clear my choice