State whether the following statements are True or False: 1. The expectations theory views long-term interest rates as equaling the average of future short-term interest rates expected to occur over the life of the bond. 2. The more collateral there is backing a possible loan, the less the lender has to worry about adverse selection. 3. The risk that interest payments will not be made, or that the face value of a bond is not repaid when a bond matures is interest rate risk. 4. Checkable deposits are reported as assets on a bank's balance sheet. 5. When Jane Brown writes a $100 check to her nephew (who lives in another state), Ms. Brown's bank loses assets of $100 and gains liabilities of $100. 6. The principal-agent problem explains why debt contracts are so much more prevalent in| financial market than equity contracts. 7. Because of an expected rise in interest rates in the future, a banker will likely buy long-term rather than short-term bonds. 8. Holding large amounts of bank capital helps prevent bank failures because it can be used to absorb the losses resulting from a deposit outflow. 9. Banks hold excess and secondary reserves to reduce the interest-rate risk problem. 10. Banks seek the highest returns possible subject to minimizing risk and making adequate provisions for liquidity. 11. Banks earn profits primarily by issuing loans