Castagna, Chapter 6: Monitoring Liquidity Risk Study Notes contain 14 pages covering the following learning objectives:
Distinguish between deterministic and stochastic cash flows and provide examples of each.
Describe and provide examples of liquidity options, and explain the impact of liquidity options on a bank’s liquidity position and its liquidity management process.
Define liquidity risk, funding cost risk, liquidity generation capacity, expected liquidity, cash flow at risk.
Interpret the term structure of expected cash flows and cumulative cash flows.
Discuss the impact of available asset transactions on cash flows and liquidity generation capacity.
After reviewing the notes, you will be able to apply what you learned with practice questions.
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