Question
Which of the following are the components that are
required to be estimated for credit risk quantification? 1. Probability of default 2. Expected Loss 3. Exposure at default 4. Loss Given defaultSolution
The expected loss is the amount a lender might lose by lending to a borrower. The components of expected loss are: Probability of default (or PD) is the likelihood that a borrower would not be able (or would not be willing) to repay their debt in full or on time. In other words, it is an estimate of the likelihood that the borrower would default. Usually, PD refers to a particular time horizon. Loss given default (or LGD) is the share of an asset that is lost if a borrower defaults. It is the proportion of the total exposure that cannot be recovered by the lender once a default has occurred. Exposure at default (or EAD) is the total value that a lender is exposed to when a borrower defaults. Therefore, it is the maximum that a bank may lose when a borrower defaults on a loan.
Match Column I and Column II and choose the correct match from the given choices
In each of the following questions, two columns are given containing three sentences/ phrases each. A sentence or phrase from the first column may or m...
In the question, a sentence is divided into three parts; you have to connect the sentence by using the right connector, without altering its meaning ...
Match Column I and Column II and choose the correct match from the given choice
Match Column I and Column II and choose the correct match from the given choice
Column (1)
Column (1)
Column (1)
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