12-21 Which of the Following Methods Measure Loan Concentration Risk

question 50

Multiple Choice

12-21 Which of the following methods measure loan concentration risk by tracking credit ratings of firms in particular sectors or ratings class for unusual downgrades?

• A)Migration analysis.
• B)Concentration limits.
• C)Loan loss ratio-based model.
• D)KMV portfolio manager model.
• E)Loan volume-based model.

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Definitions:

Making a Loss

Making a loss occurs when a business's total expenses exceed its total revenues during a specific period, indicating that the business is not financially profitable.

Minimize Losses

Strategies or measures taken to reduce the extent of financial loss or to prevent future losses.

Total Cost

Total cost is the entire expense associated with the production of a set of goods or services, including both fixed and variable costs.

Output

The total amount of goods or services produced by an individual, firm, or country over a specific period.