As the major authorized deposit-taking institutions (ADIs), Australian banks safety and profit level have major impacts in Australian economy.

i) List and define 3 major risks faced by banks (3 marks)

ii) List 3 factors that affect the Interest Rate Margin (IRM) of banks. (3 marks)

iii) Briefly explain how the Covid-19 pandemic would affect the major risks of banks and its potential impact on the IRM of banks (2 marks)

iv) Banks are regulated in terms of capital adequacy. Briefly discuss how this requirement would help banks maintain safety during the Covid-19 pandemic. (3 marks)