Question: Can you help me with these two questions? Please be as detailed as possible. Thank you very much. (a) What are off-balance activities? Give two

Can you help me with these two questions? Please be as detailed as possible. Thank you very much.

(a) What are off-balance activities? Give two good examples and two bad examples of these activities. (8 marks) (b) Explain the definition of the capital-asset ratio of a financial institution. How would it affect the profitability and risk of the financial institution? Use the ratio to explain the rapid rise in profit of Lehman Brother before the sub-prime crisis and its eventual collapse during the global financial tsunami. (10 marks)

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