Which of the following can be used to reduce credit exposures to a counterparty:
Which of the following can be used to reduce credit exposures to a counterparty:
I. Netting arrangements
II. Collateral requirements
III. Offsetting trades with other counterparties
IV. Credit default swaps
A . I and II
B . I, II, III and IV
C . I, II and IV
D . III and IV
Answer: C
Explanation:
Offsetting trades with other counterparties will not reduce credit exposure to a given counterparty. All other choices represent means of reducing credit risk. Therefore Choice ‘c’ is the correct answer.
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