The Potential Exposure Component of the Credit Equivalent Amount of OBS

question 96

Multiple Choice

The potential exposure component of the credit equivalent amount of OBS derivative items reflects

• A)the probability of an adverse price movement in contracts.
• B)the cost of replacing a contract if a counterparty defaults today.
• C)the probability today of a counterparty contract default in the future.
• D)the maximum price loss for any given position.

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Definitions:

Criminals

Individuals who have committed acts that are in violation of societal laws or norms.

European Middle Class

A socio-economic group in Europe typically characterized by moderate wealth, educational attainment, and a degree of cultural influence.

Atlantic Slave Trade

The historical trade of African peoples, forcibly transported to the Americas as slaves by European traders from the 16th to the 19th centuries.

Portuguese

Relating to Portugal or its people, language, or culture, a Southern European country on the Iberian Peninsula.