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Which of the following would you consider as the main drivers of credit risk: a) Economic factors,...

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Finance

Which of the following would you consider as the main drivers ofcredit risk:

a) Economic factors, borrower characteristics and legalinfrastructure

b) Recovery rates, credit exposure and probability ofdefault

c) Interest rates, probability of defaults and concentration oflending

d) Counterparty credit ratings, loss given default, and exposureat default

Give a short explanation justifying your answer.

Answer & Explanation Solved by verified expert
3.6 Ratings (392 Votes)
Credit Risk The possibility of borrowers failure to the repayment of the loan or failure to meet out other obligation is considered as credit risk Basically it is impossible to identify who will do    See Answer
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Transcribed Image Text

Which of the following would you consider as the main drivers ofcredit risk:a) Economic factors, borrower characteristics and legalinfrastructureb) Recovery rates, credit exposure and probability ofdefaultc) Interest rates, probability of defaults and concentration oflendingd) Counterparty credit ratings, loss given default, and exposureat defaultGive a short explanation justifying your answer.

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