The diagram below is a KMV model schematic. Name the labels A to H in the diagram and describe the KMV model's application to lending decisions. [15 marks] E D F G B H In an ideal situation, bank regulators constantly update themselves with respect to current trends and product innovations in credit risk. Required: a) Why should regulators keep themselves updated to these trends and changes? [4 marks] b) What is Credit Value at Risk? [3 marks] c) Why do regulators require regular stress testing of bank credit risk? (In your answer define stress testing). [4 marks] 1 Required: a) Under what circumstances will a bank use Credit Default Swaps (CDS) to hedge their credit risk? [4 marks] b) Describe how a bank manages different kinds of risks by using CDS. [4 marks] A- B IU x === III I ABC 123 DC 4) ENG 8 Marks R7 KE 9:03 2021/6/14