Sunshine Bank is a small bank that is being sued by a customer because the bank foreclosed on her home. She feels that more generous terms could have been worked out, especially since she has been out of work. It sounds as though the bank will have to worry now about _____. (Select all that apply.)

The lawsuit creates legal risk because the bank may face legal costs or liability over how it handled the foreclosure. The customer’s account of the case could also harm public trust in the bank, creating reputation risk. Nothing in the question points to changing market prices or difficulty meeting cash obligations, so market and liquidity risk do not apply.

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