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      Question

      The Liquidity Coverage Ratio (LCR) under Basel III norms

      aims to ensure that banks:
      A Have enough Tier II capital Correct Answer Incorrect Answer
      B Are profitable Correct Answer Incorrect Answer
      C Have high Net Interest Margins Correct Answer Incorrect Answer
      D Hold enough liquid assets to meet short-term obligations Correct Answer Incorrect Answer
      E Maintain long-term debt obligations Correct Answer Incorrect Answer

      Solution

      LCR requires banks to hold sufficient High-Quality Liquid Assets (HQLA) to cover net cash outflows for 30 days under stress conditions.

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