Which of the following statements regarding borrower$-$specific attributes used in a qualitative default risk model is incorrect?

A$.$

Firms with high volatility of earnings typically are associated with higher credit risk than those with low volatility of earnings.

B$.$

A firm's leverage ratio is positively related to its default probability of risky debt.

C$.$

Bank loans, by regulation, are required to have collaterals to minimize credit risk.

D$.$

A borrowing firm's reputation is considered an implicit contract term that could affect its borrowing costs.