12-24 a Weakness of Migration Analysis to Evaluate Credit Concentration

question 55

Multiple Choice

12-24 A weakness of migration analysis to evaluate credit concentration risk is that the

• A)information obtained for this analysis is usually ex-post (i.e.after the fact).
• B)information obtained for this analysis is ex-ante (i.e.before the fact).
• C)analysis makes use of historical data classified only by industries.
• D)analysis makes use of historical data classified by individual firms.
• E)migration of firms may only be temporary.

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Definitions:

Security Interests

A legal claim or lien on collateral that secures the performance of an obligation, typically seen in financing transactions.

Enforceable Oral Contracts

Verbal agreements that are recognized by law as binding, provided they meet certain criteria and are not for purposes requiring written contracts under the statute of frauds.

Substitute

An alternative or replacement for something else, often found or used when the original is unavailable or unsuitable.

Extend

To prolong the duration of something or to reach out in space or time.