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Directions (Q.1-10): In the following passage there are blanks, each of which has been numbered. These numbers are printed below the passage and against each, five words are suggested, one of which fits the blank appropriately. Find out the appropriate word in each case.
The traditional method of managing credit risk is (1) diversification. Although (2) credit risk through diversification is effective, institutions are often constrained by (3) of diversification (4) on account of limited area of (5). During the last few years, managing credit risk through selling assets by way of securitization has (6) in popularity. The market for securitized assets has grown (7) in the last few years and is expected to grow further in the (8) years. This mode of credit risk mitigation is most (9) to loans with standardized payment schedule and similar credit risk characteristics such as housing loans, auto loans, credit card receivables, etc. Further, shedding loans through securitization might (10) client relationship. In this context, credit derivatives provide a new technique for managing credit risk.