Which of the Following Involves Most Credit Risk

question 3

Multiple Choice

Which of the following involves most credit risk

• A) Exchange trading
• B) OTC trading with a central clearing party being used
• C) OTC trading with bilateral clearing and collateral being posted
• D) OTC trading with bilateral clearing and no collateral being posted

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Definitions:

Percentage-Of-Completion Method

An accounting method that recognizes revenues and expenses of long-term projects proportionately with the degree of completion.

IFRS

International Financial Reporting Standards; a set of accounting standards developed by the International Accounting Standards Board (IASB) that is used globally to prepare public company financial statements.

Contract Revenue

Revenue recognized by a company from contracts for the sale of goods or services, often recognized over the period of the contract based on the completion or delivery of services/goods.

IFRS

International Financial Reporting Standards are a set of accounting standards developed by the International Accounting Standards Board that are becoming the global standard for the preparation of public company financial statements.