Explanation:
C is correct. Wider spreads indicate a loss of market confidence in the bank and a higher cost of funding.
A is incorrect. A stronger early-warning indicator (EWI) for the bank would be a decrease in stock price of the bank relative to its peers.
B is incorrect. A decrease, not an increase, in available credit is problematic for liquidity.
D is incorrect. Rapid asset growth funded by volatile liabilities would be more problematic.
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A
A decrease in the stock price of some of the bank’s peers but not in the stock price of the bank itself
B
An increase in available credit lines received from other financial institutions.
C
Widening spreads on the bank’s issued debt and credit default swaps
D
Significant asset growth funded by an increase in stable liabilities