Explanation:
Jason assumes credit risk on all listed dates. On Jan 4th, purchasing insurance introduces counterparty risk with the insurance provider. On Jan 31st, prepaying for steel exposes him to supplier risk (credit risk that the supplier fails to deliver). On Feb 8th and 9th, delivering steel on credit exposes him to default risk from his clients. On Feb 13th, depositing money in the bank introduces counterparty risk with the bank. Therefore, credit risk increased on all cited transaction dates.
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24.1.3. Jason is a small business owner specializing in the wholesale of steel. Jason worked hard on his business, so he purchased insurance to help safeguard his company on January 4th, 2023. Later that month, on January 31st, he made a significant payment to secure a shipment of steel that will arrive on February 2nd, 2023. Jason delivered the steel to two clients on February 8th and 9th; however, he did not receive payment from the clients until February 13th. After receiving the proceeds, Jason deposited the money at ABC bank.
Among these transaction dates, on which did Jason increase his credit risk?
A
None of the transactions increase his credit risk
B
His credit risk increased on the Jan dates (Jan 4th and 31st) but was unchanged on Feb dates (Feb 8th, 9th and 13th)
C
His credit risk increased on the Feb dates (Feb 8th, 9th, and 13th) but was unchanged on Jan dates (Jan 4th and 31st)
D
His credit risk increased on all of the cited transaction dates; i.e., both Jan dates (4th and 31st) and all Feb dates (8th, 9th, and 13th)
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