Question
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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