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

In which country was the Pacific Endeavor-2018, a communication exercise under the Multinational Communications Interoperability Program (MCIP), held in...
The MANI app launched by RBI supports which primary language interface?
Under the National Education Policy of 2020, the old 10+2 structure will be replaced by a __________ framework.
Which one of the following statements is correct as per the Constitution of India?
Which of the following statements is true about biodiversity hotspots?

1. The British Biologist Norman Myers coined the term “biodiversity hots...
Which of the following is an incorrect pair of abbreviation and its full form?
Which country was ranked below India in the Global Gender Gap report 2023 released by the World Economic Forum?
As per the provisions of the Industrial Employment (Standing Orders) Act, 1946, standing orders shall come into operation after the expiry of how many ...
Verghese Kurien is known for
The Rajgir Zoo is located in which of the following states?

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

Solution