Explanation:
Risk-based pricing heavily relies on quantitative models, data analysis, machine learning, and mathematical algorithms to accurately determine the risk-adjusted price for individual customers. Therefore, avoiding these mathematical models is not a characteristic or benefit of risk-based pricing. Options A, C, and D describe actual benefits of implementing a risk-based pricing framework.
Ultimate access to all questions.
605.3. According to Crouhy, each of the following is a benefit of risk-based pricing EXCEPT which is not?
A
Gives managers the ability to map pricing strategies to key corporate metrics like profit
B
Avoids an over-reliance on machine learning and mathematical algorithms which cannot capture subjectivity
C
Creates potential for retail bank managers to increase shareholder value while taking into account constraints
D
For the same retail product, enables bank to offer higher interest rates to some customers based on risk factors (as long as they are legal risk factors)
No comments yet.