CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

Even if an asset-backed security is guaranteed by an insurer, it is still subject to credit risk because ______

I. the insurer can default.
II. the loss can be higher than the insured amount.
III. the insurer can be downgraded.
IV. the issuer of the security can be downgraded.
Correct Answer: I, II and III

Downgrading of the issuer of the security is the result of the increased credit risk of the issue, rather than a reason for it.

User Contributed Comments 4

User Comment
danlan2 Where can I get this?
mazen1967 from this los
rhardin Read the notes.
philerup Issuer of security is not relevant.
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