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:

Lose

To be deprived of something or fail to win, such as losing an object, game, or opportunity.

Past

The past refers to the time period that has already happened, contrasting with the present and future.

Accept

To receive or agree to take something offered or to acknowledge the truth or validity of something.

Who's

Short for "who is" or "who has," used in questions and relative clauses.