Secured Lending – CFT Exam '23 Study Guide & Practice Questions
Which of the options below correctly identifies three secondary sources of repayment (SSOR)? -
correct answer ✔✔Collateral, guarantees, and standby letters of credit
How would cross-age, also known as Taint, be correctly defined? - correct answer ✔✔The
remaining balance of accounts receivable under 90 are considered ineligible if a defined
percentage (generally 25%) or more of an account is aged over 90 days.
True or False: It is preferable to lend on FIFO valued inventory because use of this valuation will
more closely reflect current market values. - correct answer ✔✔True
What is the rationale for setting A/R concentration limits for a borrowing base? - correct answer
✔✔Concentrations can be very risky for both the bank and borrower and limiting exposure
lowers risk of non-collection.
Which component of inventory is generally the riskiest to lend against? - correct answer
✔✔Work-in-Process
Which option below correctly identifies two types of collateral that should be ineligible in a
borrowing base? - correct answer ✔✔Inventory held in open locations and work-in-process
What Article of the Uniform Commercial Code includes rules for perfecting security interest in
A/R and Inventory? - correct answer ✔✔Article 9
What two types of asset valuations are generally required in an equipment appraisal? - correct
answer ✔✔Forced liquidation value and orderly liquidation value
Which of the options below correctly identifies three secondary sources of repayment (SSOR)? -
correct answer ✔✔Collateral, guarantees, and standby letters of credit
How would cross-age, also known as Taint, be correctly defined? - correct answer ✔✔The
remaining balance of accounts receivable under 90 are considered ineligible if a defined
percentage (generally 25%) or more of an account is aged over 90 days.
True or False: It is preferable to lend on FIFO valued inventory because use of this valuation will
more closely reflect current market values. - correct answer ✔✔True
What is the rationale for setting A/R concentration limits for a borrowing base? - correct answer
✔✔Concentrations can be very risky for both the bank and borrower and limiting exposure
lowers risk of non-collection.
Which component of inventory is generally the riskiest to lend against? - correct answer
✔✔Work-in-Process
Which option below correctly identifies two types of collateral that should be ineligible in a
borrowing base? - correct answer ✔✔Inventory held in open locations and work-in-process
What Article of the Uniform Commercial Code includes rules for perfecting security interest in
A/R and Inventory? - correct answer ✔✔Article 9
What two types of asset valuations are generally required in an equipment appraisal? - correct
answer ✔✔Forced liquidation value and orderly liquidation value
