
Explanation:
The primary objective of a liquidity stress test is to assess the bank's ability to withstand severe but plausible liquidity shocks. A key output of this test is the cash flow survival horizon (or survival period), which estimates how long the bank can continue to operate and meet its obligations without access to new funding before its liquidity buffers are depleted. Options B and D are related to profitability and earnings stress testing, while Option C is related to capital adequacy and leverage.
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20.11.3. Which of the following is the MOST LIKELY output of a bank's liquidity stress test report?
A
Cash flow survival horizon
B
Net interest income projection
C
Leverage ratio of unsecured debt to equity
D
Return on equity versus threshold and target
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