Financial Risk Manager Part 2
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Ultimate access to all questions.
Which of the following statements best distinguishes between through-the-cycle (TTC) and point-in-time (PIT) credit rating systems?
A
Through-the-cycle ratings aim to provide a stable measure of credit risk over an extended period, while point-in-time ratings focus on short-term fluctuations and immediate credit risk.
B
Through-the-cycle ratings are regularly updated to reflect the latest borrower status, while point-in-time ratings capture credit risk throughout an entire economic cycle.
C
Through-the-cycle ratings emphasize the immediate credit risk faced by the borrower, while point-in-time ratings filter out short-term noise to offer a steady picture of creditworthiness.
D
Through-the-cycle ratings are suitable for short-term transactions and loans, while point-in-time ratings provide a conservative and forward-looking assessment of credit risk.