Cumulative Default Probability Refers to

question 39

Multiple Choice

Cumulative default probability refers to

• A)probability that a borrower will default over a specified multi-year period.
• B)expected maximum change in the loan rate due to a change in the risk factor on the loan.
• C)historic default rate experience of a bond or loan.
• D)expected maximum change in the loan rate due to a change in the credit premium.
• E)probability that a borrower will default in any given year.

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Definitions:

Adjusting Journal Entry

An accounting entry made to correct or update the financial records and ensure accurate reporting.

Liabilities

Financial obligations or debts that a company owes to external parties, which must be settled over time through the transfer of economic benefits.

Deferral

Accounting method to postpone the recognition of revenues or expenses until a future accounting period.

Journal Entry

A record in the accounting ledger that represents a transaction and its effect on various accounts, used for tracking and organizing financial data.