Counter Party Credit Risk in OBS Contracts

question 134

Multiple Choice

Counter party credit risk in OBS contracts

• A)is the risk that the counterparty will likely default when he is in the money on a contract position.
• B)refers to the risk that a counterparty will default when suffering large actual or potential losses on its position.
• C)requires the counterparty to return to the market and replace contracts at less favorable terms.
• D)All of the options.

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Definitions:

Net Income

The total profit of a company after subtracting all expenses, including taxes, from its total revenues.

IFRS Categories

Classifications under the International Financial Reporting Standards that dictate the presentation and disclosure of financial information in the financial statements.

Cash Flows

The sum of funds being moved in and out of a company, particularly influencing its ability to meet short-term obligations.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in any given jurisdiction.