Which of the Following Statements Is True

question 37

Multiple Choice

Which of the following statements is true?

• A) According to KMV, default correlations tend to be low and lie between 0.002 and 0.15.
• B) According to KMV, default correlations tend to be high and lie between 0.42 and 0.65.
• C) According to KMV, default correlations vary and thus no particular range can be stated.
• D) None of the listed options are correct.

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Definitions:

Factoring

A financial transaction where a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.

Trade Credit

An agreement where a buyer is allowed to purchase goods or services and pay the supplier at a later scheduled date.

Venture Capitalist

An investor who provides capital to startup companies and small businesses with perceived long-term growth potential in exchange for equity.

Leverage Advisor

A financial advisor specialized in guiding clients on how to use borrowed funds or leverage to potentially increase investment returns.