As Part of Measuring Unobservable Default Risk Between Borrowers, the Moody's

question 50

Multiple Choice

As part of measuring unobservable default risk between borrowers, the Moody's Analytics model decomposes asset returns into

• A)credit risk and market risk.
• B)systematic risk and unsystematic risk.
• C)market risk and sovereign risk.
• D)regional risk and maturity risk.
• E)systematic risk and default risk.

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Definitions:

Continental Rift

A linear zone where the Earth's crust and lithosphere are being pulled apart and is the site of potential volcanic activity and new oceanic crust formation.

Contact Metamorphism

A process where rocks are altered due to heat and chemical fluids from nearby magma.

Normal Faults

Fractures in the Earth's crust where rock layers have moved vertically relative to each other due to extensional forces.

Shearing

The deformation of a material by slippage along parallel planes, often associated with faults and seismic activity in the Earth's crust.