CLFP Exam Questions & Answers
What is Chapter 7 Bankruptcy?
Select one:
a. Bankruptcy that applies to governmental entities
b. Reorganizational bankruptcy in which debtor hopes to continue to do business
c. Bankruptcy that applies to family farms
d. Liquidating bankruptcy in which entity will stop operating and assets are sold
Correct Answer
Answer:
Liquidating bankruptcy in which entity will stop operating and assets are sold
Question 2
What is the primary role of asset management?
Select one:
a. The primary role of asset management is to help the equipment finance company
understand the upfront value of the equipment investment.
b. The primary role of asset management is to help the equipment finance company
understand the value of the equipment investment at the end of the lease.
c. The primary role of asset management is to help the equipment finance company
understand the upfront value of the equipment investment and the business risks
associated with equipment return and/or repossession.
d. The primary role of asset management is to help the equipment finance company
understand the upfront value of the equipment investment and the value at the end
of the lease.
Correct Answer
Answer:
The primary role of asset management is to help the equipment finance company
understand the upfront value of the equipment investment and the value at the end
of the lease.
Page 1 of 122
,Question 3
What is portfolio management?
Select one:
a. Portfolio management is the one-time process of evaluating the nature and
performance of the portfolio of leases to allow management to determine future
underwriting adjustments, current loss reserves, and strategic planning.
b. Portfolio management is the yearly process of evaluating the nature and
performance of the portfolio of leases to allow lessees to determine future
underwriting adjustments, current loss reserves, and strategic planning.
c. Portfolio management is the continuous process of evaluating the nature and
performance of the portfolio of leases to allow management to determine future
underwriting adjustments, current loss reserves, and strategic planning.
d. Portfolio management is the continuous process of reviewing the nature and
performance of the portfolio of leases, for informational purposes only.
Correct Answer
Answer:
Portfolio management is the continuous process of evaluating the nature and
performance of the portfolio of leases to allow management to determine future
underwriting adjustments, current loss reserves, and strategic planning.
Question 1
What is risk-based pricing?
a. It is a method adopted by many lenders and lessors where the rate on a
transaction is determined solely by the time value of money.
b. It is a method adopted by many lenders and lessors where the rate on a
transaction is determined not only by the time value of money but also by an
estimation of the of equipment value deterioration and the probability of
default and/or the probability of loss.
c. It is a method adopted by many lenders and lessors where the rate on a
transaction is determined solely by an estimation of the probability of default
and/or the probability of loss.
d. It is a method adopted by many lenders and lessors where the rate on a
transaction is determined not only by the time value of money but also by an
estimation of the probability of default and/or the probability of loss.
Correct Answer
d. It is a method adopted by many lenders and lessors where the rate on a
transaction is determined not only by the time value of money but also by an
estimation of the probability of default and/or the probability of loss.
Page 2 of 122
,Question 2
In the context of credit enhancements, by increasing the _________________in a
transaction, a lessor may help to compensate itself for any added risk to a
transaction.
a. Inherent rate
b. Term length
c. Collateral
d. Security deposit
Correct Answer
a. Inherent rate
Question 3
These laws prescribe practices for certain states concerning situations in which
a lessor or secured party has an interest in both personal property and in real
property.
a. Anti-deficiency laws
b. Anti-fulfillment law
c. Anti-repossession laws
d. Anti-foreclosure laws
Correct Answer
a. Anti-deficiency laws
Question 4
Net Income / Total Assets
a. Gross profit margin
b. Operating profit margin
c. Return on assets
d. Net profit margin
Correct Answer
c. Return on assets
Page 3 of 122
, Question 5
In addition to current ratios and cash flow calculations, credit analysts should
evaluate trends over a ________________period. Although it is important to note
changes year over year, any trend analysis done with less information is
considered very limited.
a. Three or four-year
b. Six or seven-year
c. Five or six-year
d. Two or three-year
Correct Answer
a. Three or four-year
Question 6
An additional level of due diligence for the third-party origination channel and
the vendor origination channel is the following:
a. Source credit approval process
b. Customer site inspections
c. Enhanced source due diligence
d. Enhanced customer due diligence
Correct Answer
a. Source credit approval process
Question 7
What is the significance of Revenue Procedure 2001-28?
a. It lays out criteria the IRS would use to respond to advanced rulings on
whether a transaction is a lease.
b. It lays out criteria the FASB would use to respond to advanced rulings on
whether a transaction is a lease.
c. In the context of equipment financing, it has no significance.
d. It lays out criteria the IRS would use to respond to advanced rulings on
whether a transaction is a loan.
Correct Answer
a. It lays out criteria the IRS would use to respond to advanced rulings on
whether a transaction is a lease.
Page 4 of 122
What is Chapter 7 Bankruptcy?
Select one:
a. Bankruptcy that applies to governmental entities
b. Reorganizational bankruptcy in which debtor hopes to continue to do business
c. Bankruptcy that applies to family farms
d. Liquidating bankruptcy in which entity will stop operating and assets are sold
Correct Answer
Answer:
Liquidating bankruptcy in which entity will stop operating and assets are sold
Question 2
What is the primary role of asset management?
Select one:
a. The primary role of asset management is to help the equipment finance company
understand the upfront value of the equipment investment.
b. The primary role of asset management is to help the equipment finance company
understand the value of the equipment investment at the end of the lease.
c. The primary role of asset management is to help the equipment finance company
understand the upfront value of the equipment investment and the business risks
associated with equipment return and/or repossession.
d. The primary role of asset management is to help the equipment finance company
understand the upfront value of the equipment investment and the value at the end
of the lease.
Correct Answer
Answer:
The primary role of asset management is to help the equipment finance company
understand the upfront value of the equipment investment and the value at the end
of the lease.
Page 1 of 122
,Question 3
What is portfolio management?
Select one:
a. Portfolio management is the one-time process of evaluating the nature and
performance of the portfolio of leases to allow management to determine future
underwriting adjustments, current loss reserves, and strategic planning.
b. Portfolio management is the yearly process of evaluating the nature and
performance of the portfolio of leases to allow lessees to determine future
underwriting adjustments, current loss reserves, and strategic planning.
c. Portfolio management is the continuous process of evaluating the nature and
performance of the portfolio of leases to allow management to determine future
underwriting adjustments, current loss reserves, and strategic planning.
d. Portfolio management is the continuous process of reviewing the nature and
performance of the portfolio of leases, for informational purposes only.
Correct Answer
Answer:
Portfolio management is the continuous process of evaluating the nature and
performance of the portfolio of leases to allow management to determine future
underwriting adjustments, current loss reserves, and strategic planning.
Question 1
What is risk-based pricing?
a. It is a method adopted by many lenders and lessors where the rate on a
transaction is determined solely by the time value of money.
b. It is a method adopted by many lenders and lessors where the rate on a
transaction is determined not only by the time value of money but also by an
estimation of the of equipment value deterioration and the probability of
default and/or the probability of loss.
c. It is a method adopted by many lenders and lessors where the rate on a
transaction is determined solely by an estimation of the probability of default
and/or the probability of loss.
d. It is a method adopted by many lenders and lessors where the rate on a
transaction is determined not only by the time value of money but also by an
estimation of the probability of default and/or the probability of loss.
Correct Answer
d. It is a method adopted by many lenders and lessors where the rate on a
transaction is determined not only by the time value of money but also by an
estimation of the probability of default and/or the probability of loss.
Page 2 of 122
,Question 2
In the context of credit enhancements, by increasing the _________________in a
transaction, a lessor may help to compensate itself for any added risk to a
transaction.
a. Inherent rate
b. Term length
c. Collateral
d. Security deposit
Correct Answer
a. Inherent rate
Question 3
These laws prescribe practices for certain states concerning situations in which
a lessor or secured party has an interest in both personal property and in real
property.
a. Anti-deficiency laws
b. Anti-fulfillment law
c. Anti-repossession laws
d. Anti-foreclosure laws
Correct Answer
a. Anti-deficiency laws
Question 4
Net Income / Total Assets
a. Gross profit margin
b. Operating profit margin
c. Return on assets
d. Net profit margin
Correct Answer
c. Return on assets
Page 3 of 122
, Question 5
In addition to current ratios and cash flow calculations, credit analysts should
evaluate trends over a ________________period. Although it is important to note
changes year over year, any trend analysis done with less information is
considered very limited.
a. Three or four-year
b. Six or seven-year
c. Five or six-year
d. Two or three-year
Correct Answer
a. Three or four-year
Question 6
An additional level of due diligence for the third-party origination channel and
the vendor origination channel is the following:
a. Source credit approval process
b. Customer site inspections
c. Enhanced source due diligence
d. Enhanced customer due diligence
Correct Answer
a. Source credit approval process
Question 7
What is the significance of Revenue Procedure 2001-28?
a. It lays out criteria the IRS would use to respond to advanced rulings on
whether a transaction is a lease.
b. It lays out criteria the FASB would use to respond to advanced rulings on
whether a transaction is a lease.
c. In the context of equipment financing, it has no significance.
d. It lays out criteria the IRS would use to respond to advanced rulings on
whether a transaction is a loan.
Correct Answer
a. It lays out criteria the IRS would use to respond to advanced rulings on
whether a transaction is a lease.
Page 4 of 122
