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CMFASPrepStudyingRES5
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Financial advisory
RES5Financial Advisory Services✓For a mainstream retail fund, collateral taken against OTC exposure should generally be:
Sound collateral practice requires high-quality, liquid, diversified assets that are marked to market frequently - so the collateral can be relied on and sold quickly if needed; taking the counterparty's own securities creates wrong-way/correlation risk.
Good collateral is liquid, diversified and revalued; concentrating in the counterparty's own stock defeats the purpose.
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