Netting allows a significant reduction in credit risk but increases market risk

Name: Netting allows a significant reduction in credit risk but increases market risk
Brand: Quizplus
Rating: 4.9 (46 reviews)

Question

Quizplus · Accepted Answer

Netting reduces the credit risk by offsetting amounts owed between two parties, leading to a single net payment obligation, but it does not inherently increase market risk. Market risk is related to the value of securities fluctuating in the market, which is independent of the netting process.

Netting Allows a Significant Reduction in Credit Risk but Increases