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Exam 2016-FRR Topic 1 Question 221 Discussion

Actual exam question for GARP's 2016-FRR exam
Question #: 221
Topic #: 1
Which one of the following four model types would assign an obligor to an obligor class based on the risk characteristics of the borrower at the time the loan was originated and estimate the default probability based on the past default rate of the members of that particular class?

Suggested Answer: C Vote an answer

* Model Definition: Historical frequency models are used to assign an obligor to a class based on risk characteristics at the time of loan origination and estimate default probability based on the past default rates of that class.
* Application: These models use historical data to determine the probability of default by analyzing past defaults within the same risk class, providing a statistical basis for risk assessment.

by Sabrina at Jul 04, 2024, 11:21 PM

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