Which of the Following Isnot a Reason to Favor the Top-Down

question 3

Multiple Choice

Which of the following isnot a reason to favor the top-down approach to modeling correlated default versus the bottom-up approach?

• A)The loss distribution in simple cases is easy to compute in closed-form.
• B)The computational complexity of the top-down approach is far less than that of the bottom-up one.
• C)It is easier to model CDOs on CDOs.
• D)It enables breaking down the portfolio loss name by name.

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Definitions:

Net Purchases

The total purchases of inventory less returns, allowances, and discounts over a specific period.

Merchandise Available for Sale

The total quantity of goods that a retailer has on hand and ready to sell to customers.

Beginning Inventory

The value of all inventory held by a company at the start of an accounting period.

Merchandise Inventory

Goods that a retail or wholesale company intends to sell to customers for a profit, listed as a current asset on the balance sheet.