All else the same, if a bank\"s liabilities are more sensitive to interest rate fluctuations...

1) When banks offer borrowers smaller loans than they have requested, banks are said to

A) shave credit.

B) rediscount the loan.

C) raze credit.

D) ration credit.

2) Credit risk management tools include

A) deductibles.

B) collateral.

C) interest rate swaps.

D) duration analysis.

3) How can specializing in lending help to reduce the adverse selection problem in lending?

4)Managing Interest-Rate Risk  Risk that is related to the uncertainty about interest rate movements is called

A) default risk.

B) interest-rate risk.

C) the problem of moral hazard.

D) security risk.

5) All else the same, if a bank\"s liabilities are more sensitive to interest rate fluctuations than are its assets, then ________ in interest rates will ________ bank profits.

A) an increase; increase

B) an increase; reduce

C) a decline; reduce

D) a decline; not affect