CEC Certification Exam questions and
answers graded A+
D - correct answer ✔✔Your manager has asked you to prepare an analysis for a borrowing
request at Your Bank. Which of the following tasks are you most likely to complete first?
a. Prepare a term sheet
b. Create a projection
c. Analyze the company's available collateral
d. Evaluate the company's business strategy
C - correct answer ✔✔You are calling for the first time on the owner of a successful local
business that currently banks with another bank in your market. You are very interested in
developing a banking relationship with the business and its owner. Which of the following goals
will be most important to achieve in the initial meeting?
a. Obtain a commitment from the owner to open a checking account at your bank.
b. Offer a term sheet outlining a loan at a competitive rate.
c. Learn about the owner's business and personal objectives.
d. Gather the most recent financial statements on the business.
D - correct answer ✔✔Gruper Home Appliances, Inc., a manufacturer of kitchen appliances,
sells 70% of its goods to X-Mart, a large national retailer of consumer durables. Which of the
following best describes the reason why Gruper has a low degree of bargaining power with X-
Mart?
a. There are no substitutes for the product
b. The suppliers have high variable costs
c. Customers have brand loyalty
d. Sales are concentrated with a large volume buyer
,D - correct answer ✔✔The NBER has released a report that suggests the economy is showing
signs that it is moving into early contraction. You review your current portfolio to develop a list
of customers that are likely to fare best through this cycle. Which of the following would be
included on your list?
a. A plumbing supplies distributor
b. A local high fashion retailer
c. A manufacturer of auto engines
d. A local accounting firm
C - correct answer ✔✔You are preparing to meet with the owner of Style-For-Less, a successful
retailer of apparel geared to young professionals. The owner has obtained and outfitted a
second location in a high-traffic retail mall in preparation for its planned opening and has asked
to meet with you to discuss a possible financing need. Based on the industry, you think the
owner will most likely have a need for:
a. A commercial mortgage to purchase the new location
b. A lease to fund the acquisition of store fixtures
c. A line of credit to purchase inventory for the upcoming season
d. A term loan to purchase a point-of-sale system
C - correct answer ✔✔Parsons and Associates is a highly-regarded business financial advisory
firm located in a downtown office building that was founded thirty-five years ago by Grant
Parsons. Your bank has a long-term relationship with both the business and its founder. You
recently saw Grant Parsons at a bank-sponsored economic outlook forum and he suggested you
stop by his office to discuss some potential opportunity. Based on the type of company and life
cycle stage, which of the following do you think is the most likely opportunity to be discussed?
a. A mortgage to fund the purchase a new building.
b. A line of credit to fund a seasonal buildup in receivables.
c. A term loan to fund the buyout of his interest by his partners.
d. A new loan to refinance his home mortgage.
, D - correct answer ✔✔[The Conference Board announced today that interest rates remain low.
Reports indicate that companies are holding lower inventories and capital expenditures have
decreased. The availability of credit continues to be tight.] Based on the above report, which of
the following best describes the current stage in the general business cycle?
a. Early expansion
b. Late expansion
c. Early contraction
d. Late contraction
C - correct answer ✔✔The economy is entering the late contraction stage of the business cycle.
Your Bank has four customers requesting an increase to their lines of credit. Assuming their
overall creditworthiness is comparable, which of the following customers would exhibit the
least risk to the Bank?
a. A wholesaler of floor coverings
b. An upscale children's clothing boutique
c. A beer and soda distributor
d. A temporary staffing firm
D - correct answer ✔✔In which industry lifecycle stage would companies be most likely to focus
on cost discipline?
a. Introductory
b. Growth
c. Mature
d. Decline
B - correct answer ✔✔In which company lifecycle stages is a company most likely to be
profitable?
a. Introductory and growth
answers graded A+
D - correct answer ✔✔Your manager has asked you to prepare an analysis for a borrowing
request at Your Bank. Which of the following tasks are you most likely to complete first?
a. Prepare a term sheet
b. Create a projection
c. Analyze the company's available collateral
d. Evaluate the company's business strategy
C - correct answer ✔✔You are calling for the first time on the owner of a successful local
business that currently banks with another bank in your market. You are very interested in
developing a banking relationship with the business and its owner. Which of the following goals
will be most important to achieve in the initial meeting?
a. Obtain a commitment from the owner to open a checking account at your bank.
b. Offer a term sheet outlining a loan at a competitive rate.
c. Learn about the owner's business and personal objectives.
d. Gather the most recent financial statements on the business.
D - correct answer ✔✔Gruper Home Appliances, Inc., a manufacturer of kitchen appliances,
sells 70% of its goods to X-Mart, a large national retailer of consumer durables. Which of the
following best describes the reason why Gruper has a low degree of bargaining power with X-
Mart?
a. There are no substitutes for the product
b. The suppliers have high variable costs
c. Customers have brand loyalty
d. Sales are concentrated with a large volume buyer
,D - correct answer ✔✔The NBER has released a report that suggests the economy is showing
signs that it is moving into early contraction. You review your current portfolio to develop a list
of customers that are likely to fare best through this cycle. Which of the following would be
included on your list?
a. A plumbing supplies distributor
b. A local high fashion retailer
c. A manufacturer of auto engines
d. A local accounting firm
C - correct answer ✔✔You are preparing to meet with the owner of Style-For-Less, a successful
retailer of apparel geared to young professionals. The owner has obtained and outfitted a
second location in a high-traffic retail mall in preparation for its planned opening and has asked
to meet with you to discuss a possible financing need. Based on the industry, you think the
owner will most likely have a need for:
a. A commercial mortgage to purchase the new location
b. A lease to fund the acquisition of store fixtures
c. A line of credit to purchase inventory for the upcoming season
d. A term loan to purchase a point-of-sale system
C - correct answer ✔✔Parsons and Associates is a highly-regarded business financial advisory
firm located in a downtown office building that was founded thirty-five years ago by Grant
Parsons. Your bank has a long-term relationship with both the business and its founder. You
recently saw Grant Parsons at a bank-sponsored economic outlook forum and he suggested you
stop by his office to discuss some potential opportunity. Based on the type of company and life
cycle stage, which of the following do you think is the most likely opportunity to be discussed?
a. A mortgage to fund the purchase a new building.
b. A line of credit to fund a seasonal buildup in receivables.
c. A term loan to fund the buyout of his interest by his partners.
d. A new loan to refinance his home mortgage.
, D - correct answer ✔✔[The Conference Board announced today that interest rates remain low.
Reports indicate that companies are holding lower inventories and capital expenditures have
decreased. The availability of credit continues to be tight.] Based on the above report, which of
the following best describes the current stage in the general business cycle?
a. Early expansion
b. Late expansion
c. Early contraction
d. Late contraction
C - correct answer ✔✔The economy is entering the late contraction stage of the business cycle.
Your Bank has four customers requesting an increase to their lines of credit. Assuming their
overall creditworthiness is comparable, which of the following customers would exhibit the
least risk to the Bank?
a. A wholesaler of floor coverings
b. An upscale children's clothing boutique
c. A beer and soda distributor
d. A temporary staffing firm
D - correct answer ✔✔In which industry lifecycle stage would companies be most likely to focus
on cost discipline?
a. Introductory
b. Growth
c. Mature
d. Decline
B - correct answer ✔✔In which company lifecycle stages is a company most likely to be
profitable?
a. Introductory and growth
