GARP 2016-FRR Exam - Topic 4 Question 27 Discussion

Question

To safeguard its capital and obtain insurance if the borrowers cannot repay their loans, Gamma Bank accepts financial collateral to manage its credit risk and mitigate the effect of the borrowers' defaults. Gamma Bank will typically accept all of the following instruments as financial collateral EXCEPT?

Barb · Accepted Answer

A) Unrated bonds issued and traded on a recognized exchange

Barb · Answer

B) Equities and convertible bonds included in a main market index

Barb · Answer

C) Commercial debts owed to a company in a form of receivables

Barb · Answer

D) Mutual fund shares and similar unit investment vehicles subject to daily quotes