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Question
In 1994, The Federal Reserve Board ruled against a proposal to use quantitative models to assess credit concentration risk because
A. current methods to identify concentration risk were not sufficiently advanced.
B. there was no public data on default rates on publicly traded bonds.
C. there was sufficient information on commercial loan defaults for banks to perform in-house analysis.
D. problems related to credit concentration risk have been minimal for U.S. banks.
E. there was already a law that requires banks to set aside capital to compensate for credit concentration risk.
Answer
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