1. Which of the following loans looks like it has the lowest risk of loss?

a. An unsecured loan to a BBB borrower

b. A loan to a single B borrower secured by real estate

c. A loan to high yield borrower with a single B rating that is secured by cash equivalent assets

d. A secured loan to a BB-rated borrower secured by inventory

2. The Federal Reserve system makes money and distributes all the profits to its owners (which are the banks in each respective district)

True or False?

3. Which of the following are generally regarded as risks for banks?

a. Counterparty risk

b. Changes in interest rates

c. Default risk

d. Settlement risk

e. All of the above