1. What does it mean when we say, "Banks borrow short and lend long" (8) Explain what interest rate risk is and how borrowing short and lending long exposes banks to interest rate risk. (14) Explain how interest rate swaps can protect a bank from interest rate risk (8) 9-10 sentences, 2. A small business owner of two restaurants in Brooklyn needs to borrow $100.000 to renovate her restaurants so she goes to a bank for a loan. Why are banks the source of funds for small businesses rather than the bond or money markets? (6) When banks give out loans they are exposed to adverse selection and moral hazard. Define adverse selection (4) and moral hazard (4) and explain two ways that banks protect themselves from adverse selection (8) and two ways they protect themselves from moral hazard (s) when lending out money. 12 sentences 3. Many factors contributed to the housing financial crisis of 2007-2008-2009 Securitization was one of those factors. Explain how securitization to and two other factors (10 eachy contributed to the crisis. 12 sentences Make sure to use your own words when you write your answers you want to quote from the book or an online source footnote tell me your source AND explain the quote in your own words you just copy phrases from a source and don't explain it in your own words. I contgive you credit because I can't tell if you understand what you've written the points for each part of the questions is shown in the parentheses. The parentheses Jodd up to 90 points. om gals pointed on to everyone on this exam For example if you com 60 of the 90 points on the exam, you will get a 95.60 will become a 75 wrote at the end of each question approximately how many sentences I think you will need to answer the questions. That is only an estimate could take you less or a for more sentences