Issuing bonds are an important mechanism for attracting capital into the financial markets. 1. What is the importance of Credit-Rating Agencies? 2. List at least two (2) credit-rating agencies in the US. 3. Explain how they affect the efficiency of Capital Markets. Gap Analysis" is crucial to the successful management of a bank. 1. What are the Two primary components of Gap Analysis 2. What is the biggest concern of a bank that does not regularly conduct "Gap Analysis" 3. What should a bank do if inflation increases? How may it affect its "demand" deposits? Bonds with the same term of maturity will have different interest rates. Explain the Risk Structure of Interest Rates 1. What is the FIRST primary reason and how does it affect interest rates. 2. What is the SECOND primary reason and how does it affect interest rates. 3. What is the THIRD primary reason and how does it affect interest rates. Banks must balance their fiduciary responsibility of asset management with "liquidity management" Explain the importance of "liquidity management 5. What is the concern of the bank regarding its iquity 6. What do banks do to manage liquidity risk