Counterparty credit risk assessment differs from traditional credit risk assessment in all of the following features EXCEPT:

Counterparty credit risk assessment differs from traditional credit risk assessment in all of the following features EXCEPT:
A . Exposures can often be netted
B . Exposure at default may be negatively correlated to the probability of default
C . Counterparty risk creates a two-way credit exposure
D . Collateral arrangements are typically static in nature

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Answer: D

Explanation:

Counterparty credit risk assessment differs from traditional credit risk assessment primarily in the features of exposures being netted, the possibility of negative correlation between exposure at default and the probability of default, and the two-way nature of credit exposure. Collateral arrangements in counterparty credit risk management are typically dynamic, not static, as they can change based on market conditions and the credit quality of the counterparty. Therefore, the feature that does not differ is that collateral arrangements are typically static in nature.