g) Contingent credit risk is more serious for futures contracts than forward contracts because the over-the-counter arrangements necessary to replicate the guarantees at a later date.
g) Contingent credit risk is more serious for futures contracts than forward contracts because the over-the-counter arrangements necessary to replicate the guarantees at a later date.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![True or False
g) Contingent credit risk is more serious for futures contracts than forward contracts because
the over-the-counter arrangements necessary to replicate the guarantees at a later date.
h) In the event of a bank run, depositor claims on the bank are satisfied on a pro rata basis.
i) Portfolio risk can be reduced through diversification only if the returns of the loans in the
portfolio are negatively correlated.
j) A systematic loan loss risk is based on historic loss ratios and is a measure of the
sensitivity of loan losses in a particular business sector relative to the losses in and FI's
loan portfolio.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7891e6b0-d921-4668-a821-5418770a4867%2Fee1b0c48-a1cc-4cdc-a06d-6d4825f226aa%2Ft3r8vod_processed.jpeg&w=3840&q=75)
Transcribed Image Text:True or False
g) Contingent credit risk is more serious for futures contracts than forward contracts because
the over-the-counter arrangements necessary to replicate the guarantees at a later date.
h) In the event of a bank run, depositor claims on the bank are satisfied on a pro rata basis.
i) Portfolio risk can be reduced through diversification only if the returns of the loans in the
portfolio are negatively correlated.
j) A systematic loan loss risk is based on historic loss ratios and is a measure of the
sensitivity of loan losses in a particular business sector relative to the losses in and FI's
loan portfolio.
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