1) Write briefly on the following: (20 points) a) Asymmetric information b) Adve

1) Write briefly on the following: (20 points) a) Asymmetric information b) Adverse selection c) ) Moral hazard d) Principal-Agent problem e) Transaction cost and small investment 2) Write briefly on the following: (20 points) a) Required reserve b) Excess reserve c) ) Liability management d) Volatility of interest rate e) The causes of bank failure 3)Which method does the FDIC use for handling failing banks? What costs are not borne by the failing banks? (20 points) 4) Both the sellers and buyers of debt instrument benefit by engaging in forward market or interest-rate forward contract. True or False? Discuss. (20 points). 5) How can you explain the tremendous growth in international banking? (20 points)