What are the different types of risks the banks and other financial institutions are exposed to? What are the Asset-Liability Management Strategies? Explain.

Assignment Questions [10 Marks

1. What are the different types of risks the banks and other financial institutions are exposed to?    [2 Marks]
2. What are the Asset-Liability Management Strategies? Explain. [2 Marks]
3. Explain the loanable fund theory of Interest Rate Determination. [2 Marks]
4. What are the different types of derivatives? Take an example and explain Interest rate swaps.    [2 Marks]
5. Calculate the interest-sensitive GAP (IS GAP) and Relative IS GAP ratio for a financial institution if interest-sensitive assets (ISA) are $100 million and interest-sensitive liabilities (ISL) are $125 million. Is that firm an Asset sensitive? Explain.[2 Marks]