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9. Characterize the risk exposure(s) of the following FI transactions by choosing one or more of the following: ( LG 20-1) a. Credit risk b.
9. Characterize the risk exposure(s) of the following FI transactions by choosing one or more of the following: ( LG 20-1) a. Credit risk b. Interest rate risk c. Off-balance-sheet risk d. Foreign exchange rate risk e. Country/sovereign risk f. Technology risk (1) A bank finances a $10 million, six-year, fixed-rate commercial loan by selling one-year certificates of deposit. (2) An insurance company invests its policy premiums in a long-term municipal bond portfolio. (3) A French bank sells two-year fixed-rate notes to finance a two-year fixed-rate loan to a British entrepreneur. (4) A Japanese bank acquires an Austrian bank to facilitate clearing operations. (5) A mutual fund completely hedges its interest rate risk exposure using forward contingent contracts. (6) A bond dealer uses his own equity to buy Mexican debt on the less developed countries (LDC) bond market. (7) A securities firm sells a package of mortgage loans as mortgage-backed securities
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