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How does a bank try to achieve the best possible risk adjusted return on its overall loan portfolio?
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- How do banks assess the risk appetite of each customers in terms of investment.How does credit risk for a financial institution differs from default risk and What are the problems faced by a financial institution to measure credit risk?Explain the concept of “Value-at-Risk” (VAR) in the context of banks’ credit risk management. How is VAR linked to regulatory capital requirements?
- what is a credit risk, market risk and business risk. Give some examples. How can you hedge them?What is the difference between interest rate risk and default risk? How do combinations of terms in ARMs affect the allocation of risk between borrowers and lenders?how can the term structure of credit risk approach model mitigate future credit risk issues for Washington Mutual
- How do you think participations affect the riskiness of a loan?how can credit matrics model mitigate future credit risk issues for Washington MutualWhat are the main differences between ARMs and FRMs loans? You need to highlight the differences in terms of allocation of risk between borrowers and lenders.