5. The risk that an unanticipated increase in liability withdrawals may cause an FI to have to sell assets at fire sale prices is an example of

A. credit risk. B. liquidity risk. C. interest rate risk. D. sovereign risk. E. technology risk.

6. Suppose that machinery used by Bank-Twenty for sorting and clearing checks breaks down. This is a manifestation of:

A. Credit risk B. Insolvency risk C. Operational risk D. Liquidity risk E. Market risk

7. A U.S. bank, Stateside Bank, makes some cross-border loans denominated in the euro. Fluctuations in the dollar value of the euro will give rise to:

A. credit risk B. off-balance-sheet risk C. operational risk D. foreign exchange risk E. country risk

8. Which of the following would bring about off-balance-sheet risk for a financial institution?

A. A bank issues a letter of credit B. An insurance company buys some corporate bonds C. A credit union receives a savings deposit D. A pension fund invests in some common stock E. A bank makes a business loan