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AIM 3: Describe Portfolio Manager and its similarity to CreditMetrics.

1、Portfolio Manager and CreditMetrics:

A) use the same number of factors.

B) are different in that Portfolio Manager uses fewer factors than CreditMetrics.

C) are different in that Portfolio Manager uses more factors than CreditMetrics.

D) do not use a factor approach.

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The correct answer is B

Portfolio Manager has only one factor, while CreditMetrics has several factors.

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2、Which of the following statements, with respect to KMV’s Portfolio Manager and its similarity to CreditMetrics, is the most correct?

A) They are both based on multivariate distributions.

B) They are both based on one factor.

C) They both only focus on defaults.

D) They are very different, and have very little in common.