What does it mean about credit risk has a “dark side”?

Q: How do banks assess the risk appetite of each customer in terms of choosing the right investment?

A: Risk appetite is the ability to absorb or undertake a level of investment risk by the investor. This…

Q: What is financial risk? How is it related to business risk?

A: The financial risk is the risk which is related to the non-payment of the fixed financial charges.…

Q: What are some examples of financial instruments that can be used for hedging interest rate risks,…

A: There are many ways to manage the interest rate risk.

Q: What is meant by credit risk analysis?

A: Risk is referred as uncertainty or loss. Financial risk is referred as the variability of actual…

Q: What is the term of interest on bank overdraft?

A: On basis of creditworthiness, a bank allows a person to draw excess money from his account…

Q: Why is it a bad idea in investing in just one investment

A: Note : Dear student as per the Q&A guideline we are required to answer the first question only…

Q: What is the causes of the financial risk?

A: financial risk - financial risk is the possible danger of losing money from an investment made by…

Q: what is MORATORIUM” IN BANKING? explain.

A: During a moratorium period, your lender will calculate the interest on your loan using the notion of…

Q: what basic criteria are commonly used in evaluating credit risk?

A: Credit risk is the risk of facing a loss due to a counterpart's failure to repay the debt in part or…

Q: Explain the concept of liquidity risk in banking. Why is it important to control liquidity risk?

A: Liquidity refers to the ability of a bank to meet its cash and collateral obligations without…

Q: Credit analysts are likely to consider which of the following in making a rating recommendation?A .…

A: Credit analysts are professionals who are appointed by credit rating agencies or any investment…

Q: What is financial risk?

A: Risk refers to the undesired consequences arises due to the uncertainty. In other words, risk refers…

Q: What is the importance of Credit Rating Agency?

A: Credit Rating agencies assign the credit rating to the issuer of debt. They provide information…

Q: What are the major drivers of portfolio-level credit risk?

A: Financial institutions are frequently mapping and controlling the risk from credit exposures at…

Q: What are some examples of financial instruments that can be used for hedging interest rate risks,…

A: Interest rate risks are the risk of losing value of the investment as the market interest rate…

Q: What is the difference between interest rate risk and default risk? How do combinations of terms in…

A: Interest rate risk is the risk of an investment due to changes in interest rate. When market rates…

Q: What are the advantages and disadvantages of using credit?

A: Credit is defined as the financial agreement where the borrowers receive something valuable and in…

Q: What is the role of transferring credit risk? What is the various instruments used to transfer this…

A: Risk transfer is a management strategy that involves transferring the risk from one party to another…

Q: What is off–balance sheet financing?

A: To keep the debt-to-equity and leverage ratios low, companies opt to record certain liabilities and…

Q: What is credit risk

A: In the world of finance credit risk is one of the most important risk and one of the most tangible…

Q: Which of the following is the not the function of the financial markets?

A: Option Explanation 1 Financial market helps in creating habits of small savings 2 It helps in…

Q: Could you explain the term "financial risk" in simple terms

A: Financial risk - The risk of losing money on an investment.

Q: How to define credit risk and how to limit that risk.

A: Business provide credit to customers to encourage buying more So payment are paid by customers on…

Q: Why is granting credit riskier in an international context?

A: The term credit refers to selling goods on credit by the business top its customers i.e. instead of…

Q: What is the difference between Cash Flow Risk and Interest Rate Risk? Please explain it clearly so…

A: Risk is referred to as the possibility of putting oneself or someone in unfortunate…

Q: what are the benefit to the financial institution and their consumers of measuring or mitigating…

A: A strategy for planning for and decreasing the impact of hazards on an organisation is risk…

Q: Does collateral reduces moral hazard by borrowers? Why?

A: Introduction: A collateral asset is an asset that a lender accepts as payment for a loan. Depending…

Q: Which type of information asymmetry explains why bad credit risks are more likely to seek bank…

A: Adverse selection, as a rule, alludes to a circumstance where dealers have data that buyers do not…

Q: discuss how a risk management tool can be used to mitigate liquidity risk and credit risk

A: The process of identifying, assessing, and controlling hazards to an organization's capital and…

Q: Which is not the types of foreign risk Default risk O Price risk O Sovereign risk O transactional…

A: risk: it is probability of loss.

Q: risk transformtion in banks

A: Risk is a term that is used for defining the uncertainty arising in the future from changes in…

Q: Why is there a need to manage risk in financial institutions?

A: A financial institution (FI) is a firm that specializes in financial activities, including deposits,…

Q: What are the risk associated with banking activities?

A: Bank's major activity involves collection of funds and lending credit. These activities involve huge…

Q: How should derivatives be used in risk management? What problems can occur?

A: Derivatives are financial instruments that have values derived from other assets like stocks, bonds,…

Q: How can brokers and dealers make money? Which activity is riskier? Why?

A: Brokers make money generally by charging the commission on the transaction as the % of the…

Q: Were low-interest rates the underlying cause of the financial crisis? Explain.

A: Financial crisis A financial crisis refers to a condition when there is a significant decrease in…

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.