In Order to Effectively Absorb or Manage Various Types of Risk

question 23

Multiple Choice

In order to effectively absorb or manage various types of risk, the financial institution should adopt the following techniques:

• A) collateral security against credit risk.
• B) guarantees supplements collateral to avoid absorb credit risk.
• C) loan loss reserves
• D) all of the above

---

Definitions:

Contracted

Entered into a formal and legally binding agreement between two or more parties outlining specific obligations.

Anticipatory Repudiation

A declaration by one party to a contract of their intention not to perform their future obligations as agreed, allowing the other party to treat the contract as breached and seek remedies.

Mutual Agreement

A mutual agreement is an understanding or arrangement made between two or more parties, usually detailed in a formal contract.

Discharge

The release or termination of a person’s duty, debt, or obligation, effectively relieving them from responsibility.