Which of the Following Statements Is True

question 59

Multiple Choice

Which of the following statements is true?

• A)Loan loss ratio based models rely on actual data and involve the estimation of the systematic loan loss risk of a particular industry relative to the loan loss risk of an FI's total loan portfolio.
• B)Loan loss ratio based models rely on historic data and involve the estimation of the systematic loan loss risk of a particular industry relative to the loan loss risk of an FI's total loan portfolio.
• C)Loan loss ratio based models rely on historic data and involve the estimation of the systematic loan loss risk of a particular borrower relative to the loan loss risk of an FI's total loan portfolio.
• D)Loan loss ratio based models rely on actual data and involve the estimation of the systematic loan loss risk of a particular borrower relative to the loan loss risk of an FI's total loan portfolio.

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Definitions:

Public Offering Price

The price at which new issues of stocks or bonds are offered to the public by an issuer for the first time.

Spread

The difference between two prices or rates, such as the bid and ask price of a stock, or the interest rates of two different investments.

Yield to Maturity

The total return anticipated on a bond if the bond is held until it matures, including both interest payments and capital gains.

Bond Indenture

A legal and binding contract between a bond issuer and the bondholders, specifying the terms of the bond such as the interest rate, maturity date, and other conditions.