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Which of the following measures can be used to reduce settlement risks:
Suggested Answer: C
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increasing the timing differences between the two legs of the transaction will increase settlement risk and not reduce it. Using escrow arrangements, such as central clearing houses to settle transactions (eg the DTCC in the United States) reduces settlement risk. Cash settlements based on netting arrangements reduce settlement risk, while physical delivery combined with gross cash payments increase it.
Therefore Choice 'a' is the correct answer.
13 comments · newest first
DE
Detra
11 months ago
Wait, are we sure all these options actually reduce risks?
BR
Brendan
11 months ago
All of the above seems like the safest bet!
AN
Anissa
12 months ago
Physical delivery can definitely help, but is it always practical?
LE
Lea
12 months ago
I disagree, increasing timing differences just complicates things.
BR
Britt
12 months ago
Escrow arrangements are a solid way to reduce risks!
MA
Mariann
1 year ago
I feel like "all of the above" could be the right answer since each option seems to address different aspects of settlement risk.
LE
Leatha
1 year ago
I practiced a similar question where physical delivery was mentioned as a way to reduce risks. I wonder if that applies here too.
IZ
Izetta
1 year ago
I think increasing timing differences could actually increase risks rather than reduce them, but I might be mixing it up with another concept.
RO
Rodolfo
1 year ago
I remember studying that escrow arrangements can help mitigate settlement risks, but I'm not entirely sure if they are the only solution.
VA
Val
1 year ago
A business activity model? I don't think that's the right answer. That's more focused on the high-level business processes, not the specific sequence of tasks. I'm leaning towards the swim-lane diagram as the best option.
RO
Rosalind
1 year ago
Watch out for legal terminology here. 'Offering' suggests the explicit intent to corrupt, which is key. I'm leaning strongly towards option A.
VA
Vallie
1 year ago
Hmm, this seems straightforward. I think the best option here is to create a view, since that will allow other users to easily access the combined customer and order data with the calculated columns.
IR
Irving
1 year ago
Wait, is encryption the same as decryption? I'm getting a little confused on the difference between those two. I better double-check my notes before answering this one.