The Major Source of Risk Exposure Resulting from Issuance of Standby

question 7

Multiple Choice

The major source of risk exposure resulting from issuance of standby letters of credit is:

• A)technology risk
• B)interest rate risk
• C)credit risk
• D)off-balance-sheet risk

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Definitions:

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Productive Economic Resource

Assets or inputs used in the production of goods and services, including land, labor, capital, and entrepreneurship.

Entrepreneurship

The activity of setting up a business or businesses, taking on financial risks in the hope of profit.

Use Of Money

The various purposes for which money is used in an economy, including spending, saving, and investing.