Financial Risk Manager Part 2
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A risk manager at a bank is seeking to better understand recent liquidity risk failures. Several real-life cases are reviewed. Which of the following lessons would be best illustrated by the case of Metallgesellschaft in 1993?
A
Negative public perception of emergency borrowing from the central bank can cause a bank run.
B
Positive feedback trading in illiquid instruments can cause excessive losses.
C
Hedging liabilities by rolling forward futures contracts may create cash flow mismatches.
D
Futures provide a better effective hedge for hedging commodities exposure than forwards.