Characterize the risk exposure(s) of the following FI transactions by choosing one or more of the following:

Question:

Characterize the risk exposure(s) of the following FI transactions by choosing one or more of the following:
a. Credit risk
b. Interest rate risk
c. Off-balance-sheet risk
d. Foreign risk
e. Country/ sovereign risk
f. Technology risk
(1) A bank finances a $ 10 million, six-year, fixed-rate commercial loan by selling one-year certificates of deposit.
(2) An insurance company invests its policy premiums in a long- term municipal bond portfolio.
(3) A French bank sells two-year fixed-rate notes to finance a two-year fixed-rate loan to a British entrepreneur.
(4) A Japanese bank acquires an Austrian bank to facilitate clearing operations.
(5) A mutual fund completely hedges its interest rate risk exposure using forward contingent contracts.
(6) A bond uses his own equity to buy Mexican debt on the less developed countries (LDC) bond market.
(7) A securities firm sells a package of mortgage loans as mortgage- backed securities.

Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...