In analyzing credit risk for a loan to a major diversified corporation,the bank typically has which of the following advantages?
I. Market-based models to analyze credit risk
II. Greater negotiating power due to the size of the loan required
III. Ratings agency measures of default risk

Question

Quizplus · Accepted Answer

The bank typically has access to market-based models to analyze credit risk, as well as ratings agency measures of default risk, which are advantages in analyzing credit risk for a loan to a major diversified corporation. Greater negotiating power due to the size of the loan required is not necessarily an advantage in credit risk analysis. Therefore, options B and C are not correct, leaving options A, D, and E. As both options A and D include the advantage of using market-based models and ratings agency measures, the correct answer is D, which includes only advantages that are typically available to banks in analyzing credit risk for large corporations.

In Analyzing Credit Risk for a Loan to a Major