8010 Exam Dumps | Which of the following is not a tool available to financial institutions for managing credit risk:

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PRMIA.8010.v2022-06-27.q87
Question 24

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Question 24/87

Which of the following is not a tool available to financial institutions for managing credit risk:

A. Collateral

B. Cumulative accuracy plot

C. Third party guarantees

D. Credit derivatives

Correct Answer: B

Explanation
Collateral, limits to avoid credit exposure concentrations, termination rights based upon credit ratings, third party guarantees and credit derivatives are all tools or instruments that financial institutions use to manage their credit risk. A cumulative accuracy plot measures the accuracy of ratings, and is not a tool for managing credit risk. Therefore Choice 'b' represents the correct answer.

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