Exam 23: Risk Management in Financial Institutions

A bank manager concerned about interest income who expects interest rates to fall and who knows the bank currently has a positive gap should ________ rate-sensitive assets and ________ rate-sensitive liabilities.

Provisions in loan contracts that proscribe borrowers from engaging in specified risky activities are called ________.

If borrowers with the most risky investment projects are more likely to seek bank loans than borrowers with the safest investment projects, banks face the problem of ________.