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1. How does the degree of liquidity risk differ for different types of financial institutions?

1. How does the degree of liquidity risk differ for different types of financial institutions?

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Answer #1

Answer: Due to the nature of asset and liability contracts, different financial institutions are exposed to different degree of liquidity risk.

Type of financial institutions Degree of liquidity risk
Depository Institutions high liquidity risk
Life Insurance Companies Medium liquidity risk
Mutual Funds low liquidity risk
Superannuation Funds low liquidity risk
Hedge funds low liquidity risk
Pension companies low liquidity risk
Managed Funds low liquidity risk
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