Answer Happy

1. Design a basic bank balance sheet with the key components of
Assets, Liabilities, Capital, and Off-Balance Sheet items that we
discussed in class. Put some simple numbers resembling a sample
bank.

Trace the following risk on your balance sheet:
- Liquidity Risk:
- Credit Risk:
- Interest Rate Risk:
- FX Risk (to do this analysis, show on your balance sheet some FCY
assets
and liabilities as well):
For EACH risk:
a) Name the balance sheet item(s) the specific risk is mainly
related to.
b) Determine at least two possible negative things that can happen
related to this risk and show how the balance sheet is impacted
when these happen – show the changes in numbers.
c) Explain how as the manager of your bank you can minimize the
risk.
d) What controls do the regulatory authorities impose on you to
help you
control this risk.