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ALL WORK MUST BE ORIGINAL AND NO PLAGIARISM. ALL QUESTIONS REQUIRE IN TEXT CITATIONS AND REFERENCES FROM RELIABLE SOURCES.

  • Why is credit risk analysis an important component of risk management? What areas present a challenge to credit risk assessment for management and regulators?
  • Why is credit risk analysis an important component of risk management? What areas present a challenge to credit risk assessment for management and regulators?
  • Discuss and provide examples of at least four derivative securities. Be sure to include the pros and cons of each one.
  • What risks are incurred in making loans to borrowers based in foreign countries? Explain.

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Explanation & Answer

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Credit Management
Credit risk management is one of the important aspects to the financial institution
especially before extending credits to members. It helps the institution to define all features of
loan such as credit maturity collaterals and the interest rates as well as the borrower credit risk.
In the credit decision making the institutions easily understands the risk tagged to each loan. At a
point where the financial institutions stick to default rates, they are likely to face competition
from other institutions especially when the margins are low.
The areas that pose challenges to the risk management in the include complication in the...


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