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The risk that a person who borrows from a bank may not be able to repay...

The risk that a person who borrows from a bank may not be able to repay the loan is known as _________.

Market risk

Solvency risk

Credit risk

Liquidity risk

Which of the following financial instruments is an arrangement that allows one party to buy protection from another party to guard against the risk that a bond or other security will not be honored in full and on time?

A credit default swap

A senior tranche

A government sponsored enterprise

A transactions deposit
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Homework Answers

Answer #1

1. Credit risk

Explanation: Credit risk arises from the creditworthiness of a person.

2. A credit default swap

Explanation: A credit default swap allows one party to offset the credit risk faced by it with another party.

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