Off-Balance-Sheet Activities

question 29

Multiple Choice

Off-balance-sheet activities

• A)generate fee income with no increase in risk.
• B)increase bank risk but do not increase income.
• C)generate fee income but increase a bank's risk.
• D)generate fee income and reduce risk.

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Definitions:

Decline Rate

The rate at which the production of a resource, such as oil or gas, decreases over time.

CAPM

Capital Asset Pricing Model, a model that describes the relationship between systematic risk and the expected return for assets, particularly stocks.

Required Return

The minimum gain needed from an investment to make it worthwhile for the investor, considering the risk associated.

Beta

A measure of a stock's volatility in relation to the overall market; a beta higher than 1 indicates higher volatility than the market, and a beta lower than 1 indicates lower.