n NISM Certifications
NSM General NISM
Medium

The size of counterparty credit risk is equal to the ________.

Practice question from NISM Series IV - Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    credit risk

  2. replacement cost

    Correct answer

  3. C

    market risk

  4. D

    trade value

Why this is the answer

Counterparty credit risk equals the replacement cost, as if one party defaults, the other has to replace the trade at current market price.

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