Question 1
Fundamentally, _________ risk is the chance of not receiving money back in a timely
manner and as agreed.
Select one:
a. Business
b. Compliance
c. Legal
d. Credit
CORRECT ANSWER
Answer:
D) Credit
Question 2
What is considered the process in lending that determines the acceptability of a proposed
transaction based on the inherent risk of the deal and the lender's or lessor's credit
policies?
Select one:
a. Underwriting
b. Documentation
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,c. Business risk analysis
d. Origination
CORRECT ANSWER
Answer:
A) Underwriting
Question 3
The role of a credit analyst in an equipment finance company is to make decisions within
the parameters of an organization's risk appetite. The ultimate question to be answered:
does the transaction make sense? Considering the ____ "Cs" of credit can help in
answering these questions.
Select one:
a. Five
b. Six
c. Four
d. Seven
CORRECT ANSWER
Answer:
A) Five
Question 4
One way to think about credit in a lending organization is within the context of a
"____________" framework of which credit policy is a component. This framework is a
foundation for making decisions.
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, Select one:
a. Relationship
b. Risk appetite
c. Procedures
d. Guidelines
CORRECT ANSWER
Answer:
B) Risk Appetite
Question 5
The following equation is used to determine the expected loss:
% PD * LGD * EAD = Expected Loss
In this equation, what does 'PD' refer to?
Select one:
a. PD is a lessor's post-default judgment.
b. PD provides an estimate of the likelihood that a borrower will be unable to repay debt
obligations.
c. PD is a lessor's exposure at default.
d. PD refers to the amount of money a bank or other financial institution would lose should
a borrower default on loan.
CORRECT ANSWER
Answer:
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Fundamentally, _________ risk is the chance of not receiving money back in a timely
manner and as agreed.
Select one:
a. Business
b. Compliance
c. Legal
d. Credit
CORRECT ANSWER
Answer:
D) Credit
Question 2
What is considered the process in lending that determines the acceptability of a proposed
transaction based on the inherent risk of the deal and the lender's or lessor's credit
policies?
Select one:
a. Underwriting
b. Documentation
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,c. Business risk analysis
d. Origination
CORRECT ANSWER
Answer:
A) Underwriting
Question 3
The role of a credit analyst in an equipment finance company is to make decisions within
the parameters of an organization's risk appetite. The ultimate question to be answered:
does the transaction make sense? Considering the ____ "Cs" of credit can help in
answering these questions.
Select one:
a. Five
b. Six
c. Four
d. Seven
CORRECT ANSWER
Answer:
A) Five
Question 4
One way to think about credit in a lending organization is within the context of a
"____________" framework of which credit policy is a component. This framework is a
foundation for making decisions.
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, Select one:
a. Relationship
b. Risk appetite
c. Procedures
d. Guidelines
CORRECT ANSWER
Answer:
B) Risk Appetite
Question 5
The following equation is used to determine the expected loss:
% PD * LGD * EAD = Expected Loss
In this equation, what does 'PD' refer to?
Select one:
a. PD is a lessor's post-default judgment.
b. PD provides an estimate of the likelihood that a borrower will be unable to repay debt
obligations.
c. PD is a lessor's exposure at default.
d. PD refers to the amount of money a bank or other financial institution would lose should
a borrower default on loan.
CORRECT ANSWER
Answer:
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