John owns a small department store that issues its own credit cards. He has been considering phasing out his own credit card and accepting Visa or MasterCard. If John chooses to do this he will be going from a position of risk to one of risk .

Question

Quizplus · Accepted Answer

By initially issuing his own credit cards, John assumes the risk associated with credit issuance, such as default risk. Switching to Visa or MasterCard transfers this risk to the card issuers, hence from assumption to transfer of risk.

John Owns a Small Department Store That Issues Its Own