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Best method to reduce credit risk
This is from one of the questions in previous exams.
Q) what is the best method to reduce OTC credit risk.
A) posting margin
B) Marking to markert/ netting
C) limit exposure to one counter party( not sure about the wording) but it meant, diversify your transactions with multiple parties
The correct answer is C.
Can anyone justify why it is better than posting margin. |
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