Question
Which of the following products of a bank can have
credit risk? A. fund based loans B. non fund based loans C. treasury productsSolution
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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