24.2.2. Ron is a risk manager for RLA, an insurance company. Below is a conversation between Ron and his colleague Warner about credit risk. - Ron tells Warner, “RLA faces significant credit risk in our investment portfolio. We are taking on too much risk in emerging markets debt and need to find a way to hedge this risk.” - Warner responds, “I am more concerned about the credit risk we take on when originating new policies, in particular when we extend installment terms and grace periods to our corporate customers.” - Ron responds, “No, Warner, what we should worry about is our emerging market credit risk and the credit risk we are taking on from buying reinsurance.” - Warner responds, “Reinsurance? Reinsurance does not create credit risk. Reinsurance helps us mitigate our risk exposure.” In the above conversation, each of the statements is likely true (i.e., prima facie plausible) EXCEPT which of the statements is most likely incorrect? | Financial Risk Manager Part 2 Quiz - LeetQuiz