Question 42: A risk management professional within a financial institution aims to enhance their understanding of recent liquidity risk events by reviewing real-world cases. Among the various examples analyzed, which key lesson would be best illustrated by the case of Metallgesellschaft in 1993?

Exam-Like

Negative public perception of emergency borrowing from the central bank can cause a bank run.

8.5%

Positive feedback trading in illiquid instruments can cause excessive losses.

12.8%

Hedging liabilities by rolling forward futures contracts may create cash flow mismatches.

72.3%

Futures provide a better effective hedge for hedging commodities exposure than forwards.

6.4%

Financial Risk Manager Part 2