Question

1. Banks are often called ____________ because they transform you liabilities into assets for interest and fees.

2. For both lenders and borrowers the future represents a better day and an ability and promise to pay.

	True
	False

3. It stands to reason that asymmetrical data would have more variance

	True
	False

Answer 1

1.) Asset transformation institution.

Banks are called asset transformation institution because they transform your liabilities into assets for interests and fee be selling liabilities with one set of characteristics and buying the assets with different sets of characteristics.

2.)True.

This is because say, a bond is issued as he is in need of money now but in future he will be able to pay it easily. So, he borrows money now with a promise to the lende that he will pay the money with interest in future. So, basically the borrower will be in better position to pay in future and also lender will receive more money for the risk he is taking. So, in short future represent a better day for both borrower and lender for ability and promise to pay.

3.)True,

The more asymmetrical the data is, more is its probability to be scattered away from the mean and hence a greater chance for higher variance.