Choose ONE (1) of the following options.

Option 1: "The money markets always have a high level of liquidity." Is this statement correct? Explain.

Option 2: "Loan covenants are designed to protect the lender of the loan, so they benefit the lender, but not the borrower." Is this statement correct? Explain.

Option 3: "Interest rate risk is the sensitivity of the value of balance-sheet assets and their associated cash flows to movements in interest rates." Is this statement correct? Explain.

Indicate which option you have chosen to answer in the textbox below.