Explain how a commercial bank normally derives its profits, Business Management

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QUESTION

(a) Explain how a commercial bank normally derives its profits.

(b) The business of banking entails risk taking to achieve return on investment since profits are considered to be the reward for taking such risks.

Discuss the following key risks faced by banks and explain how these are managed or controlled by the institutions:

(i) Interest Rate Risk

(ii) Liquidity Risk

(iii) Operational Risk

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