B stress testingapproach c doomsdayapproach d value

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Unformatted text preview: ine by $0.5 million. D) decline by $1.5 million. 5) Banks develop statistical models to calculate their maximum loss over a given time period. This approach is known as the A) trading-loss approach. B) stress-testing approach. C) doomsday approach. D) value-at-risk approach. 6) Large Value Transfer System (LVTS) participants can make a payment only if they A) have positive settlement balances in their accounts with the Bank of Canada. B) have posted collateral (such as Government of Canada treasury bills and bonds). C) have explicit lines of credit with other participants. D) All of the above. 2 7) If LVTS participating financial institutions have insufficient settlement balances A) they can borrow from the Bank of Canada. B) they can borrow from each other in the pre-settlement trading period. C) they can borrow from the Bank of Canada at the prime rate. D) Only A and B of the above. 8) The opportunity cost of holding excess reserves is A) the bank rate. B) the treasury bill rate. C) the prime rate. D) the overnight rate. 9) If government deposits at the Bank of Canada are predicted to increase, the Bank will offset the transaction through government debt auctions to _...
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