- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 6. Introduction to Risk Management
- Subject 3. Identification of Risks
CFA Practice Question
Which risk is sometimes called Herstatt risk?
B. Liquidity risk
C. Settlement risk
A. Credit risk
B. Liquidity risk
C. Settlement risk
Correct Answer: C
Settlement risk is the risk that a party to a trade fails to make payment even though it has been paid by its counterparty. Herstatt was the name of a German bank that failed in 1974 after receiving "overnight" payments and then defaulting.
User Contributed Comments 1
| User | Comment |
|---|---|
| paxtan | this is actually from the notes #19 of the required reading. |