Which of the following statements relating to non-performance risk is incorrect?
A) The entity's own credit risk is included.
B) The holder of a corresponding asset will not fulfil the obligation.
C) The entity will not fulfil the obligation.
D) It applies to liabilities.

Question

Quizplus · Accepted Answer

Non-performance risk refers to the risk that an entity will not fulfil its obligation, which includes the entity's own credit risk and applies to liabilities. The incorrect statement, B, suggests that it involves the risk of the holder of a corresponding asset not fulfilling their obligation, which misrepresents the concept of non-performance risk as it specifically pertains to the entity's own obligations.

Which of the Following Statements Relating to Non-Performance Risk Is