1. What is the nature of an off-balance-sheet activity? How does an FI benefit from such activities? Identify the various risks that these activities generate for an FI and explain how these risks can create varying degrees of financial stress for the FI. 2. Consider two bonds, a 5-year premium bond with a coupon rate higher than its required rate of return and a zero-coupon bond that pays only a lump sum payment after 5 years with no interest over its life. Which do you think would have more interest rate risk? 3. Discuss the interrelationships among the different sources of FI risk exposure. Why would the construction of an FI risk management model to measure and manage only one type of risk be incomplete? 1. What is the nature of an off-balance-sheet activity? How does an FI benefit from such activities? Identify the various risks that these activities generate for an FI and explain how these risks can create varying degrees of financial stress for the FI. 2. Consider two bonds, a 5-year premium bond with a coupon rate higher than its required rate of return and a zero-coupon bond that pays only a lump sum payment after 5 years with no interest over its life. Which do you think would have more interest rate risk? 3. Discuss the interrelationships among the different sources of FI risk exposure. Why would the construction of an FI risk management model to measure and manage only one type of risk be incomplete