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    Question

    Which risk is a bank facing due to the mismatch between

    its assets and liabilities tenure?
    A Operational risk Correct Answer Incorrect Answer
    B Credit risk Correct Answer Incorrect Answer
    C Capital risk Correct Answer Incorrect Answer
    D Liquidity risk Correct Answer Incorrect Answer
    E Market risk Correct Answer Incorrect Answer

    Solution

    Liquidity risk refers to the risk of bank arising due to inability to meet all regular financial obligations when they come due without suffering undesirable losses. The banks manage their liquidity risk through effective asset liability management (ALM) for various time periods.

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