1. Suppose you are the CFO of DDR Cargo Limited, which is a medium sized company. Discuss three reasons why a small and medium-sized company might like to borrow from a commercial bank rather than approach an investment bank to sell securities in financial markets.

2. Assume that you are an executive in the credit risk management (CRM) division of UTR Bank. Tobby, one of your colleagues, believes that loan sales could be used by banks only to manage credit risk. Explain two reasons to Tobby how loan sales could be useful to UTR in addition to managing credit risk.

3. Assume that you are a member of the asset-liability management (ALM) committee of PMK Bank. You have collected following information, based on which you are requested to write a short report to the committee comparing the probability of book value insolvency of PMK Bank with the competitor PTY Bank.

   	PMK Bank	PTY Bank
   Expected return on assets	0.15	-0.10
   Total equity (in millions)	15	18
   Total liabilities (in millions)	105	90
   Variance of ROA	0.005	0.002