Table 2.2 Summary Balance Sheet for DLC at End of 2015 ($ millions)

Assets		Liabilities and Net worth
Cash	5	Deposits	90
Marketable Securities	10	Subordinated Long-Term Debt	5
Loans	80	Equity Capital	5
Fixed Assets	5
Total	100	Total	100

Table 2.3 Summary Income Statement for DLC in 2015 ($ millions)

Net Interest Income	3.00
Loan Losses	(0.80)
Non-Interest Income	0.90
Non-Interest Expense	(2.50)
Pre-Tax Operating Income	0.60

1. Suppose that an out-of-control trader working for DLC bank (see Tables 2.2 and 2.3) loses $7 million trading foreign exchange. What do you think would happen?

2. Which items on the income statement of DLC bank in Section 2.2 are most likely to be affected by (a) credit risk, (b) material risk, and (c) operational risk?