1.In order to operate their business, banking institutions must comply with the capital requirement rule. Describe how uniform capital requirements can dissuade banks from taking unnecessary risks. 2. Why do banks invest in stocks when loans are typically more profitable? Justify. 3. Why do you think some banks suffered larger losses during the credit crisis than the other banks? Explain your answer Explain the use of the federal funds market in facilitating bank operations. 5. Explain why diversification across different types of mutual funds is highly recommended.