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AAFM Exam CWM_LEVEL_2 Topic 1 Question 83 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam
Question #: 83
Topic #: 1
[All CWM_LEVEL_2 Questions]

Section B (2 Mark)

A bank has a limited geographic area. It would like to diversify its loan income with loans in other market areas but does not want to actually make loans in those areas because of their limited experience in those areas. Which type of credit derivative contract would you most recommend for this situation?

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Suggested Answer: B

by Arletta at Jul 17, 2024, 07:27 PM

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Felicidad
1 days ago
I think a credit swap would be the best option for the bank. It allows them to diversify their loan income without actually having to make loans in unfamiliar areas.
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Mozell
12 days ago
I'm not sure, but I think Total return swap could also be a viable option for this situation.
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Chuck
12 days ago
I agree with Hector, Credit linked note would be a good choice to diversify loan income without actually making loans in other areas.
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Hector
19 days ago
I think the best option would be a Credit linked note.
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