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Questions and Answers
Which type of organizations typically have significant credit exposure?
What is credit risk?
What are the main activities that conventional credit risk arises through?
Who is credit risk traditionally associated with?
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Besides lending, what other business entities should be concerned about credit risk?
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Study Notes
Credit Risk Overview
- Organizations with significant credit exposure include banks, credit unions, and other financial institutions that provide loans and credits.
Definition of Credit Risk
- Credit risk is the risk of loss due to a borrower's failure to meet their debt obligations.
Sources of Conventional Credit Risk
- Conventional credit risk arises through lending activities, such as mortgage lending, consumer lending, and commercial lending.
Traditional Association of Credit Risk
- Credit risk is traditionally associated with banks and other financial institutions.
Other Entities Concerned about Credit Risk
- Besides lending institutions, other business entities that should be concerned about credit risk include suppliers, wholesalers, and retailers that extend credit to customers.
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Description
Test your knowledge on credit risk and its management with this quiz. Explore the factors, likelihood of loss, and methods used to handle credit risk in business agreements.
