When a Bank Issues Relatively Safe Debt and Uses It

question 2

Multiple Choice

When a bank issues relatively safe debt and uses it to fund relatively risky assets it is creating:

• A) liquidity risk.
• B) credit risk.
• C) interest rate risk.
• D) contingency risk.

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Definitions:

Power of Attorney

A legal document authorizing one person to act on behalf of another in legal, financial, or personal affairs.

Scope of Employment

The range of activities or duties that an employee is expected to perform as part of their job.

Pelvic Fracture

A pelvic fracture is a break in one or more bones of the pelvis, often caused by a high-energy event, such as a car accident or fall, and can range in severity from minor to life-threatening.

Fulfillment of Purpose

The achievement or realization of the intended goal or function of something.