What Are Arguments for and Against Requiring Banks to Mark

question 9

Essay

What are arguments for and against requiring banks to mark all assets and liabilities to market continuously? Relate your arguments to managing credit risk and interest rate risk.

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Definitions:

Systematic Desensitization

A behavioral therapy technique used to reduce phobic responses and anxiety through gradual exposure to the feared object or situation paired with relaxation techniques.

Relaxation

The act or state of reducing tension or stress, often achieved through techniques such as meditation, deep breathing, or muscle relaxation exercises.

Fear Response

The automatic, immediate reaction to a threatening situation, often characterized by physiological changes like increased heart rate.

Unconditioned Stimulus

In classical conditioning, this is a stimulus that elicits a natural, reflexive response without the need for prior learning.