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Homework answers / question archive / How the following risks affecting the financial institutions; a
How the following risks affecting the financial institutions; a. Interest rate risk b. Technology risk 1/ 3:47 p 4. Discuss the benefits providing by the financial institutions? VI 3:47 What are the benefits of foreign exchange markets for the businesses? V 3:48 Discuss the importance of financial markets? 11 3:48 Explain the following types of institutions; a. Commercial bank b. Insurance companies c. Mutual fund 3:49 @
1).(A) INTEREST RATE RISK : Interest rate risk arises for the bond owners from rise or fall in the level of interest rates. Interest rate risk affects the financial Institutions in a way-
a) If financial institutions get higher interest rates from the borrowers than giving the interest rate to the depositors then they makes profit.
b) If financial institutions get lower interest rates from borrowers than giving the rate to the depositers then they suffer losses.
(B). Technology Risk : Technology risk arises from the use of computer systems regularly in the conduct of banking operations. It affects the financial institutions in a way-
The data is recorded in computers if it get deleted or corrupted then all the records will get vanished and it will affect the financial institutions.
