Question

What does the Probability of Default (PD) measure in the

Q: Answer-What does the Probability of Default (PD) measure in the context of credit risk?

The Probability of Default PD is a critical component of credit risk assessment, representing the likelihood that a borrower will default on their obligations within a specified time period, usually one year.

context of credit risk?

A The total loss a financial institution will incur in the event of a default.

B The amount of exposure a lender has at the time of default.

C The likelihood that a borrower will fail to meet their credit obligations within a given period, usually one year.

D The value of collateral pledged by the borrower to secure the loan.

E The ability of a borrower to repay the loan over its entire duration.

Practice Next

More Financial Management Questions

The Army Chief Gen MM Naravane announced the setting up of a 'Chair of Excellence' in memory of India's first Chief of Defence Staff ________ to conduct...
Which of the following is a badminton player?
Pandit Birju Maharaj was an Indian dancer, composer, singer, and exponent of the __________ "Kalka-Bindadin" Gharana of Kathak dance in India.
In November 2024, India's monthly GST collections were higher than the previous year by approximately:
What is the primary aim of the Pradhan Mantri Fasal Bima Yojana (PMFBY)?
Sam talks about an example of an igneous rock. Which of the following can it be?
Which of the following statements about the city of Ahmedabad is NOT true?
For which country’s Navy China has launched first of the four Advanced Warships in August 2020?
Who is the author of the book ‘Cooking to save your Life’?
The ability to acquire knowledge is one of the components of the Human Development Index. It is measured by the _______________.

What does the Probability of Default (PD) measure in the

Solution