Question: Your bank has $153 million in loan commitments which are now being drawn upon. You arent sure, but you are beginning to think that the

Your bank has $153 million in loan commitments which are now being drawn upon. You arent sure, but you are beginning to think that the bank may have some problems now. What sort of risk are you concerned about, and how can you remediate it?

a. Underwriting risk; tighten credit requirements.

b. Liquidity risk; enter the repo market.

c. Solvency risk; sell assets or sell a secondary stock issue.

d. Interest rate risk; arrange an interest rate swap.

e. Off-Balance Sheet Risk; arrange swaps, swaptions or forwards at the time the loan commitment is made.

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