Cloze Test

The traditional method of managing credit risk is....(1)....diversification. Although....(2)....credit risk through diversification is effective, institutions are often constrained by....(3)....of diversification....(4)....on account of limited area of....(5).... . During the last few years, managing credit risk through selling assets by way of securitisation has....(6)....in popularity. The market for  assets has grown....(7)....in the last few years and is expected to grow further in the....(8)....years. This mode of credit risk mitigation is most....(9)....to loans with standardised payment schedule and similar credit risk characteristics such as housing loans, auto loans, credit card receivables, etc. Further, shedding loans through securitisation might....(10)....client relationship. In this context, credit derivatives provide a new technique for managing credit risk.



1) a. by
 b. onto
c.  for
d. at
e. through

2) a. watching
b. mitigating
c. taking
d. affording
e. seeing

3) a. lack
b. supply
c. scanty
d. void
e. want

4) a. lack
b. fortune
c. activities
d. opportunities
e chance

5) a. place
b. transaction
c. operations
d. dealing
e. work

6) a. gained
b. sold
c. valued
d. brought
e. profited


7)a. gigantic
b. slowly
c. slightly
d. needlessly
e. impression

8) a. yester
b.futuristic
c. golden
d. coming
e. past


9)a. desired
b. suited
c. wanted
d. coming
e. popular


10) a. kill
b. lynch
c. promote
d, damage
e. burn