A.Exposure to fines

B.Negative publicity resulting from reputational damages

C.Punitive damages resulting from supervisory actions

D.Private settlements

A.The bank will have to pay lower interest rates to its depositors and would have to pay lower rates on its
debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to
fund the loans was of a shorter maturity than the loans.

B.The bank will have to pay lower interest rates to its depositors and would have to pay higher rates on its
debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to
fund the loans was of a shorter maturity than the loans.

C.The bank will have to pay higher interest rates to its depositors and would have to pay higher rates on its
debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to
fund the loans was of a shorter maturity than the loans.

D.The bank will have to pay higher interest rates to its depositors and would have to pay lower rates on its
debt to the extent the debt interest rate was linked to floating indices, or to the extent the debt used to
fund the loans was of a shorter maturity than the loans.

A.If rho is positive, rising interest rates increase option prices.

B.If rho is positive, rising interest rates decrease option prices.

C.As interest rates fall, all options will rise in value.

D.As interest rates rise, all options will rise in value.

A.Floating rate bonds are very sensitive to changes in interest rates.

B.Floating rate bonds have coupon payments tied to floating interest rates or floating interest rate indexes.

C.Floating rate bonds only have a small degree of interest rate risk.

D.Floating rate bonds typically have less price risk than fixed rate bonds.

A.Short-term floating-rate deposits are used to fund short-term floating rate loans.

B.Short-term fixed rate deposits are used to fund long-term floating rate loans.

C.Short-term fixed-rate deposits are used to fund short-term floating rate loans.

D.Short-term floating-rate deposits are used to fund long-term fixed rate loans.