C) Credit enhancement is a mechanism whereby external cash flows is extended by an entity which has a stringer credit profile, so that it benefits the fund raising entity
Hold on, I'm pretty sure option C is false. Doesn't credit enhancement involve the borrowing entity getting external support, not the other way around?
Hmm, I think option A is the correct answer. Credit enhancement is supposed to improve the creditworthiness of the borrowing entity, not deteriorate it.
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