CFA Practice Question

There are 221 practice questions for this study session.

CFA Practice Question

Which risk is sometimes called Herstatt 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.
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