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Question

17. credit risk refers to: a. a customized scoring system that predicts, reduces, manages a credit portfolio b. a method to allocate capital to generate additional credit to avoid risk c. is the risk that an mbs issuer may default on the obligations d. risk training for bankers and mortgage brokers

Answer

As a teacher, let me rephrase the following content while maintaining its original structure, but modifying a few words. Credit risk refers to the possibility that an MBS issuer may default on their financial obligations. The correct response would be option C. Credit risk involves the probability of incurring losses arising from a borrower's inability to make loan payments or comply with contract terms. Historically, it has indicated the likelihood of a lender declining the principal and interest payments due. Consequently, it results in financial disruptions and increased collection expenses. To mitigate credit risk, additional cash flows may be generated to provide protection. A higher coupon rate, which yields larger cash flows, may help a lender manage increased credit risk. For more information about the coupon rate, please refer to brainly.com/question/28528712 #SPJ4.