Refer to the article “Analyzing a Bank’s Financial Statements” by Hans Wagner, which is posted on the course site in BU MyCourses (Blackboard) under the Project 1 folder under “Term Projects.” After reading the article, answer the questions below. In answering the questions, you are encouraged to use input from the article and from your own research or experience

1. [8 points] Refer to the article “Analyzing a Bank’s Financial Statements” by Hans Wagner, which is posted on the course site in BU MyCourses (Blackboard) under the Project 1 folder under “Term Projects.” After reading the article, answer the questions below. In answering the questions, you are encouraged to use input from the article and from your own research or experience. A. What is(are) the primary determinant(s) of a bank interest rate risk? B. If you were a bank owner or executive, what shape of the Yield Curve would you consider as favorable for the bank’s economic performance? Why? C. When interest rates in the economy are changing, maybe because of the change in the Federal Reserve monetary policy, interest rates on which category – bank deposits or bank loans – tend to adjust more slowly? D. Under what conditions an increase in interest rates may also expose banks to credit risk? E. What type of risk a bank is exposed to when interest rates are falling? Example. F. Based on the sample balance sheet in the article, how did FI Bank performed between “prior period” and “current period,” based on average Net Income/Yield? G. What are the advantage(s) and disadvantage(s) of high provision (allowance) for loan losses in a bank? H. Indicate which of the following is a “flow” quantity and which is a “stock” quantity: (1) Provision for loan losses (2) Allowance for loan and lease losses