Question

    In a 'Consortium Financing' arrangement, the risk of

    borrower default is:
    A Borne entirely by the lead bank. Correct Answer Incorrect Answer
    B Shared by all the member banks in a pre-agreed proportion. Correct Answer Incorrect Answer
    C Borne by the borrower's parent company. Correct Answer Incorrect Answer
    D Insured by the government. Correct Answer Incorrect Answer

    Solution

    In consortium lending, the loan amount and the associated risk are shared among the participating banks and financial institutions according to their respective exposure (the amount they have agreed to lend).

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