RSK4804 Assignment 1 2025 (Answer Guide) - Due 30 May 2025

RSK4804 Assignment 1 2025 (Answer Guide) - Due 30 May 2025 Contents Question 1 [10] 2 a. Two Most Important Drivers of Credit Risk and Their Relationship to Probability of Default (PD) [5] 2 b. Calculation of the Cumulative Probability of Default over a 5-Year Period [5] 2 Question 2 [10] 3 a. Computation of the Probability of Default (PD) using the Merton Model [5] 3 b. Impact of Decrease in Volatility to 21% on PD [5] 4 Question 3 [15] 4 Introduction: 5 Understanding of the Organisation’s Internal Rating System: 5 Process Followed: 5 Decision to Approve or Deny Credit: 5 Maintaining Credit Quality of Client Portfolios: 6 Conclusion and Feedback: 6 Question 4 [15] – Application of Porter’s Five Forces Model 6 Background: 6 Porter’s Five Forces Analysis: 7 Conclusion: 8