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1. (a) Discuss the main causes of illiquidity and insolvency in banking and discuss the relationship between them. (10 marks) (b) Explain operational risk and

1. (a) Discuss the main causes of illiquidity and insolvency in banking and discuss the relationship between them. (10 marks) (b) Explain operational risk and market risk as it affects banks. Give examples. (5 marks) (c) Explain credit risk as it affects banks and discuss the techniques banks can use to manage the moral hazard created by a credit risk exposure. (10 marks)

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