Is the following statement on the treatment of counterparty credit risk (CCR)
correct?
“Treating CCR as a market risk does not allow an institution to hedge market risk losses,
and it exposes the institution to declines in counterparty creditworthiness and default. ”
AThe statement is correct with regard to both hedging market risk losses and counterparty creditworthiness and default.
BThe statement is incorrect with regard to both hedging market risk losses and counterparty creditworthiness and default.
CThe statement is correct with regard to hedging market risk losses only.
DThe statement is correct with regard to counterparty creditworthiness and default only.
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