1. Discuss when an option hedge is considered better than a futures or forward hedge.
2. Discuss the trade-offs involved between storing liquidity and purchasing liquidity for a bank
3. A corporate loan applicant has had a growing cash account for the last three years, but cash flow from operations has been negative in every year. Discuss any concerns that a loan officer, charged with approving the loan, would have.
4.Explain how the spread effect impacts the sensitivity of a bank’s NII.
5.Discuss one argument for and one argument against requiring banks to mark all assets and liabilities to market continuously. Your arguments should relate to managing credit risk and interest rate risk.
6.Describe the mandate of the Federal Reserve and discuss the circumstances that leads to conflict in the FED achieving its mandate.