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    Question

    Which of the following products of a bank can have

    credit risk? A. fund based loans B. non fund based loans C. treasury products
    A only A and C Correct Answer Incorrect Answer
    B only A and B Correct Answer Incorrect Answer
    C only B and C Correct Answer Incorrect Answer
    D only A Correct Answer Incorrect Answer
    E All the above Correct Answer Incorrect Answer

    Solution

    Credit risk the risk of loss due to default  by the customer to meet the commitments of the product. A credit risk may arise in the loans and advances extended by the bank, either in form of fund based loans (like term loans) or non-fund based loans (like bank guarantees). A credit risk may also occur in treasury products when a bond/debt instrument invested in, defaults in its obligations.

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