The Risk of a Loss Due to Closing Out a Transaction

question 15

Multiple Choice

The risk of a loss due to closing out a transaction is referred to as ____ risk.

• A) credit
• B) settlement
• C) interest rate
• D) exchange rate
• E) none of the above

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Definitions:

Flood Control System

An infrastructure or set of measures designed to manage the water level in a given area to prevent flooding.

Premium

The amount paid for an insurance policy or the extra cost for a higher quality or feature-enhanced product or service.

Moral Hazard

The situation in which one party engages in risky behavior knowing that it is protected against the risk because another party will bear the consequences.

Fire Protection Program

A program designed to prevent, detect, and suppress fires, often including public awareness campaigns, fire safety regulations, and firefighting services.