The Risk That a Customer with Whom the Bank Has

question 104

Multiple Choice

The risk that a customer with whom the bank has entered into a contract with,will fail to pay or to perform,forcing the bank to find a replacement contract with another party that may be less satisfactory is what form of risk listed below?

• A)Counterparty risk
• B)Interest-rate risk
• C)Operating risk
• D)Credit risk
• E)Liquidity risk

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Definitions:

Residual Value

The estimated value that an asset will have at the end of its useful life.

Useful Life

The estimated duration for which an asset is expected to be functional and economically viable for its intended purpose.

Periodic Depreciation

The allocation of an asset's cost over its useful life, recognized as an expense on the income statement at regular intervals, typically annually.