Accredited ACH Professional (AAP) Practice Exam

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Prepare for the Accredited ACH Professional (AAP) Exam with tailored questions and study materials to enhance your understanding of ACH transactions and operations. Test your skills and readiness for this important certification!

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What method is used to mitigate credit risk and is also mandated by ACH Rules?

Pre-Authorization
Exposure Limits
Daily Audits
Credit Reviews

The correct answer is: Exposure Limits

The correct method used to mitigate credit risk that is also mandated by ACH Rules is exposure limits. Exposure limits are essential as they help financial institutions manage the risk associated with credit exposure in ACH transactions. By establishing a limit on the amount of credit extended, institutions can better control and mitigate potential losses arising from defaults or insufficient funds in accounts of originators. This method is systematic and ensures that each transaction is within acceptable parameters, providing a safeguard against excessive risk. Furthermore, by enforcing these limits, ACH participants can ensure compliance with regulatory measures aimed at fostering a stable financial environment, reducing the risk of widespread defaults. The other options, while relevant in certain contexts, do not align with the specific requirements set forth by ACH Rules regarding risk mitigation strategies. Pre-authorization and credit reviews are actions that may assist in assessing risk but are not universally mandated in the same manner as exposure limits. Daily audits are typically internal processes that help organizations maintain oversight but are not a direct method of mitigating credit risk in the ACH context.