Which of the following is not true about credit default swaps and credit risk?
A FI examines creditworthiness of an applicant with the five C’s of credit: character, capacity, collateral, conditions, and capital.
Credit risk can cause a FI to fail.
Credit risk refers to the risk that a FI may not have enough cash to pay back depositors.
Credit default swaps reduce credit risk for FIs.
All of the above are true.