How do banks manage liquidity risk? $($Check all that apply.$)$

A$.$ Banks manage this risk by keeping some funds very liquid, such as a reverse repurchase agreement.

B$.$ Banks manage this risk by keeping some funds very liquid, such as in the federal funds market.

C$.$ Banks can increase their borrowings to cover liquidity risk.

D$.$ Banks can increase their assets to cover liquidity risk.

How do banks manage credit risk?

A$.$ Banks can manage risk by creating long$-$term business relationships by which the bank could acquire information about the creditor.

B$.$ Banks can manage credit risk by performing credit risk analysis, requiring borrowers to put up collateral, an using credit rationing.

C$.$ Banks can manage credit risk by diversifying their assets.

D$.$ All of the above are correct.

How do banks mahtrge interest$-$rate risk? $($Check all that apply.$)$

A$.$ Interest$-$rate swaps can reduce interest$-$rate risk exposure.

B$.$ Banks can manage interest$-$rate risk by keeping some funds as repurchase agreements.

C$.$ Banks can reduce interest$-$rate risk by making more floating rate loans, or ARMs.

D$.$ Banks can increase their borrowings to manage interest$-$rate risk.