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Which of the following statements is TRUE? A. Generally, at the retail level, an FI controls credit risks solely by using a range of interest

Which of the following statements is TRUE?

A.

Generally, at the retail level, an FI controls credit risks solely by using a range of interest rates or prices and not by credit rationing.

B.

Credit scoring models are advantageous because these models can sort borrowers into different default risk classes.

C.

Because they are secured by homes, residential mortgages have demonstrated very little credit risk for FIs.

D.

A borrower's reputation is an example of a market-specific factor in the credit decision.

E.

Because of compensating balances and fees used to increase return on a loan, the credit risk premium is not the fundamental factor driving the promised return once the base rate on the loan has been set.

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