ABA COMMERCIAL LENDING
MIDTERM EXAM QUESTIONS WITH
VERIFIED ANSWERS
Which option presents terms that relate to the degree to which fixed assets are
necessary to operate in an industry? - Answer-Capital intensity.
Which option represents the main use of credit files? - Answer-Serving as sources of
facts concerning lending relationships and how they have evolved over time.
Which part of the loan package information assists in proof of approval in compliance
with loan authorities? - Answer-Evidence end date of approval.
Which skill is important to a commercial banker when preparing and conducting a
business development call? - Answer-Being efficient with time.
Which specific management report summarizes various types of inventory and
identifies stale or slow-moving products? - Answer-An inventory listing
Which technique is described as the bargaining or give and take between two or
more parties? - Answer-Negotiating
Why is it important for a lender to understand cash flow cycles by industry type? -
Answer-The lender can anticipate the types of borrowing needs based on a
borrower's industry.
Summary Questions - Answer-Questions used by a commercial banker to clarify
items within other information already provided.
Income Statement - Answer-Statement that provides information regarding the
historical performance of your client over a specified period.
Suppliers of the prospective customer - Answer-Objective outside source that should
be used to supplement business development calls.
Closing Questions - Answer-Questions a business bankers uses to focus on the next
steps related to a business development call.
Elevator prose - Answer-Writing in terms of financial amounts/ratios going up or
down, not providing the reader with helpful insights.
Avoid jumping to conclusions - Answer-Action that prevents business bankers from
being in a position to interpret facts for the reader of a loan package.
Credit risk rating is generally unaffected - Answer-The impact an annual review of
non-lending components of a banking relationship generally has on the credit risk
rating of that customer.
MIDTERM EXAM QUESTIONS WITH
VERIFIED ANSWERS
Which option presents terms that relate to the degree to which fixed assets are
necessary to operate in an industry? - Answer-Capital intensity.
Which option represents the main use of credit files? - Answer-Serving as sources of
facts concerning lending relationships and how they have evolved over time.
Which part of the loan package information assists in proof of approval in compliance
with loan authorities? - Answer-Evidence end date of approval.
Which skill is important to a commercial banker when preparing and conducting a
business development call? - Answer-Being efficient with time.
Which specific management report summarizes various types of inventory and
identifies stale or slow-moving products? - Answer-An inventory listing
Which technique is described as the bargaining or give and take between two or
more parties? - Answer-Negotiating
Why is it important for a lender to understand cash flow cycles by industry type? -
Answer-The lender can anticipate the types of borrowing needs based on a
borrower's industry.
Summary Questions - Answer-Questions used by a commercial banker to clarify
items within other information already provided.
Income Statement - Answer-Statement that provides information regarding the
historical performance of your client over a specified period.
Suppliers of the prospective customer - Answer-Objective outside source that should
be used to supplement business development calls.
Closing Questions - Answer-Questions a business bankers uses to focus on the next
steps related to a business development call.
Elevator prose - Answer-Writing in terms of financial amounts/ratios going up or
down, not providing the reader with helpful insights.
Avoid jumping to conclusions - Answer-Action that prevents business bankers from
being in a position to interpret facts for the reader of a loan package.
Credit risk rating is generally unaffected - Answer-The impact an annual review of
non-lending components of a banking relationship generally has on the credit risk
rating of that customer.
