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

View Answer

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.