1 . ( 1 ) ( 5 points ) What types of activities normally are classified as off- balance - sheet ( OBS ) activities ? How does an OBS activity move onto the balance sheet as an asset or liability* ( using lines of credit as one example ) ? What are some benefits of OBS activities to a bank ? ( 2 ) ( 5 points ) Briefly describe the adverse selection and moral hazard problems faced by Insurance companies . What are the potential solutions for these problems ( you only need to describe the intuition of these solutions ) ?" ( 3 ) (5 points ) List 3 reasons that can be used to explain the IPO underpricing* phenomenon