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What is the credit risk?

a. One party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation b. The fair value of a financial asset or liability will fluctuate because of changes in exchange rates c. An entity will encounter difficulty in meeting its obligations associated with financial liabilities d. The fair value of a financial asset or liability will fluctuate because of changes in interest rates

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Question added by Deleted user
Date Posted: 2013/08/28
Mohammad Zakaria
by Mohammad Zakaria , Senior Officer , AB Bank Ltd. (Previous Employer: United Commercial Bank Ltd)

The possibility that a borrower or counterparty will fail to meet obligation araises from banks's dealing or lending to the customers.

Deleted user
by Deleted user

Option a

Prince Ninan
by Prince Ninan , Audit Executive , Lewis & Pecker

One party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation

Amjad Ali
by Amjad Ali , Regional Manager , NATIONAL BANK OF PAKISTAN

credit risk means that borrower will faill to repay interest or principal as per agreed terms.

sana imam
by sana imam , manager , Union Bank of India

the risk of default in the loan by the borrower is called credit risk.

Anil Kumar VT
by Anil Kumar VT , HR Manager , Indian Air Force

Credit risk is the probability that a borrower will default on any type of debt by failing to make payments to the lender for which he/she has an obligation to do so. This risk belongs to the lender and results in loss of principal and interest, irregular cash flows and incurring of costs of collection. The loss may be complete or partial and can arise in a number of circumstances such as inability of the borrower to repay (bankruptcy) or a country specific risk wherein the sovereign state freezing all foreign currency payments.

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