Question

Forrest fennell is thinking about investing in capital city bank. he is examining certain ratios of the bank including the ratio of nonperforming loans to total loans and leases and the provision for loan losses to total loans and leases. what type of risk is forrest attempting to measure with these ratios

Answer 1

Credit risk

Step-by-step explanation:

Credit risk is the risk that arises when the borrower fails to repay the loan to the person or the financial institution from whom he took the loan. It derives the loss possibility suffered by the lender with respect to the interest and principal amount not received by the borrower

According to the given scenario, the credit risk option is appropriate as it fits to the situation and extract the same meaning as discussed above