Which of the Following Is False in Case of Credit

question 38

Multiple Choice

Which of the following is false in case of credit enhancements?

• A) It reduces the default risk of the borrowing entity for the lender, thereby deteriorating the overall credit worthiness of the borrower
• B) Credit enhancement could be implicit or explicit
• C) Credit enhancement is a mechanism whereby external cash flows is extended by an entity which has a stringer credit profile, so that it benefits the fund raising entity

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Definitions:

Mean

The mean value of a collection of numbers, obtained by dividing the total sum of the numbers by the quantity of numbers in the collection.

Median

The middle value in a dataset when it is arranged in ascending or descending order, or the average of the two middle values when the dataset has an even number of observations.

Interquartile Range

A measure of variability, calculated as the difference between the 25th and 75th percentiles of a data set.

Mean

The average value of a data set, calculated by summing all observations and dividing by the number of observations.