1.What is credit rationing? What are the two forms of credit rationing? For each form of credit rationing, explain the r

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1.What is credit rationing? What are the two forms of credit rationing? For each form of credit rationing, explain the rationale of why financial instituion is engaging in it.
2. How does the bank deals with credit risk? According to the What are the off-balance sheet activities by banks, Which activity give rise to the principle-agent problem and how does the bank solve it?
3. What is the theory of Portfolio choice?
- Which factor will cause shifts in demand of bonds, and which is direction of the shift? ​e.g., An increase in Factor A cause the bond demand to shift to the right.
- Which factor will cause shifts in supply of bonds, and which is direction of the shift? ​e.g., An increase in Factor A cause the bond supply to shift to the right.