2016-FRR Exam Dumps | By lowering the spread on lower credit quality borrowers, the bank will typically achieve all of the

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GARP.2016-FRR.v2024-09-09.q145
Question 82

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Question 82/145

By lowering the spread on lower credit quality borrowers, the bank will typically achieve all of the following outcomes EXCEPT:

A. Aggressively courting of new business

B. Lower probability of default

C. Rapid growth

D. Higher losses in case of default

Correct Answer: B

* Impact of Lowering Spread: By lowering the spread on lower credit quality borrowers, the bank can achieve aggressive courting of new business, rapid growth, and higher losses in case of default due to the increased risk.
* Exception: Lowering the spread will not lead to a lower probability of default. On the contrary, it typically attracts higher-risk borrowers, increasing the likelihood of default.

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