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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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Ben
29 days ago
If the bank is really worried about their 'limited experience,' they should just hire a bunch of toddlers to make the loans. They've got no experience, so it's a perfect match!
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Sharen
1 months ago
Maybe the bank should try their hand at stand-up comedy instead of banking, that way they can diversify without all the 'limited experience' hassle.
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Nada
1 months ago
Credit linked note? Is that like a coupon bond for a credit score? I'm sticking with the credit swap, it's the clear winner here.
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Sonia
1 months ago
Total return swap? Sounds like a dance move, not a financial instrument. I'll go with the credit swap, keep it simple.
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Vivienne
2 days ago
I still think a credit swap would be the safest choice for the bank.
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Albina
5 days ago
I agree, a credit linked note could help diversify their loan income without actually making loans in other areas.
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Elina
7 days ago
I agree, keeping it simple is usually the best approach.
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Olive
10 days ago
I think a credit linked note would be a good option for the bank.
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Aja
15 days ago
I think a credit swap would be the best option for the bank.
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Maryann
2 months ago
A credit swap seems like the logical choice here. The bank can offload the credit risk without venturing into unfamiliar territory. Simple and effective!
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Kattie
14 days ago
D) Credit swap
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Cheryl
15 days ago
C) Total return swap
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Thaddeus
16 days ago
B) Credit risk option
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Erasmo
1 months ago
A) Credit linked note
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Felicidad
2 months 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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Layla
1 months ago
User 4: Total return swaps could provide a different type of diversification for the bank as well.
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Stanford
1 months ago
User 3: Credit linked notes could also be a good option for them to consider.
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Dorcas
1 months ago
User 2: I agree, it would allow them to diversify without taking on the risk of unfamiliar areas.
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Maryann
2 months ago
User 1: I think a credit swap would be the best option for the bank.
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Mozell
2 months 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
2 months 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
2 months ago
I think the best option would be a Credit linked note.
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