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Please answer the following questions based

on Chapter 16 "Off Balance Sheet":

Why off-balance-sheet activities could affect a financial institution (FI)'s solvency?  Can you give a few examples?  (provide 3 examples).

What is "takedown risk"?  During financial crisis, do you expect takedown risk to be better or to be worse?  Can takedown risk by itself lead to the failure of a financial institution? please explain why or why not.

What is "aggregate funding risk"? What happens to FI's exposure of this risk during a credit crunch and why?

What are the four contingent risk effects created by "loan commitment" provisions? summarize the arguments of those who believe that these four contingent risk effects imply that loan commitment activities increase the insolvency exposure of FIs, and the argument of those who believe that loan commitment contracts may make an FI less risky than had it not engaged in them. 

What are the roles of off-balance-sheet activities in reducing FI's risk? 

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