a. Recall that under the original Basel Accord, assets of the same category have the same risk weight. Does this give banks an incentive to keep more risky assets or less risky assets on their balance sheet? Explain briefly why or why not.
b. When did the biggest disintermediation in U.S. history occur and why? Start by listing the main factors that contributed to the crisis.
c. As a banker, you would make short-term loans if you expect interest rates to go down in the future. Answer true, false or uncertain and explain.