1. Off-balance-sheet activities generally have risk-reducing attributes, but seldom have risk-increasing attributes.

True

False

2. The ability to form financial holding companies for the purpose of creating full-service financial institutions has caused an increase in affiliate risk.

True

False

3. An FI has assets of $800 million and liabilities of $740 million.

If the FI bought call options on bonds with a face value of $50 million, what is the minimum amount of the stockholder's potential true net worth?

$10 million.

$70 million.

$110 million.

$790 million.

$850 million.