CFI CBCA Loan Security EXAM WITH
|\ |\ |\ |\ |\ |\
ANSWERS
Loan Security Learning Objectives - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\
✔✔01. Compare different types of security and assets
|\ |\ |\ |\ |\ |\ |\ |\
used as security |\ |\ |\
02. Determine the security value of different assets based
|\ |\ |\ |\ |\ |\ |\ |\
on MAST principles
|\ |\ |\
03. Discuss the role of legal counsel and the importance
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
of legal representation
|\ |\
Security is a form of - CORRECT ANSWERS ✔✔insurance
|\ |\ |\ |\ |\ |\ |\ |\ |\
that is provided by the borrower.
|\ |\ |\ |\ |\
• No loan should be granted if the lender expects security
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
will have to be enforced or realized.
|\ |\ |\ |\ |\ |\ |\
• Security is taken as a final safeguard in case of default.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Manage the risk of a borrower defaulting on the loan: -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔-Assess sources of loan |\ |\ |\ |\ |\ |\
repayment |\
-Assess security |\
Types of security - CORRECT ANSWERS ✔✔Direct
|\ |\ |\ |\ |\ |\
, • Real estate
|\ |\ |\
• Machinery and equipment
|\ |\ |\ |\
• Inventory
|\
Indirect
• Personal guarantees
|\ |\ |\
• Corporate guarantees
|\ |\ |\
• Letters of comfort
|\ |\ |\
Direct security relates to - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\
✔✔collateral that can be used to secure a loan. |\ |\ |\ |\ |\ |\ |\ |\
Two ways for a financial institution to secure its financing
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
position using assets: - CORRECT ANSWERS ✔✔Fixed
|\ |\ |\ |\ |\ |\ |\
Charge: (Land, Buildings, Machinery)
|\ |\ |\
• Attaches to a specific item of the company's property.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
• The lender has legal right to the asset.
|\ |\ |\ |\ |\ |\ |\ |\ |\
• The charge fixes to the asset.
|\ |\ |\ |\ |\ |\
Floating Charge: (Inventory, A/R, Marketable securities)
|\ |\ |\ |\ |\
• Attaches to a general class of assets.
|\ |\ |\ |\ |\ |\ |\ |\
• Borrower can trade its assets during the ordinary course
|\ |\ |\ |\ |\ |\ |\ |\ |\
of business.
|\ |\ |\
|\ |\ |\ |\ |\ |\
ANSWERS
Loan Security Learning Objectives - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\
✔✔01. Compare different types of security and assets
|\ |\ |\ |\ |\ |\ |\ |\
used as security |\ |\ |\
02. Determine the security value of different assets based
|\ |\ |\ |\ |\ |\ |\ |\
on MAST principles
|\ |\ |\
03. Discuss the role of legal counsel and the importance
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
of legal representation
|\ |\
Security is a form of - CORRECT ANSWERS ✔✔insurance
|\ |\ |\ |\ |\ |\ |\ |\ |\
that is provided by the borrower.
|\ |\ |\ |\ |\
• No loan should be granted if the lender expects security
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
will have to be enforced or realized.
|\ |\ |\ |\ |\ |\ |\
• Security is taken as a final safeguard in case of default.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Manage the risk of a borrower defaulting on the loan: -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔-Assess sources of loan |\ |\ |\ |\ |\ |\
repayment |\
-Assess security |\
Types of security - CORRECT ANSWERS ✔✔Direct
|\ |\ |\ |\ |\ |\
, • Real estate
|\ |\ |\
• Machinery and equipment
|\ |\ |\ |\
• Inventory
|\
Indirect
• Personal guarantees
|\ |\ |\
• Corporate guarantees
|\ |\ |\
• Letters of comfort
|\ |\ |\
Direct security relates to - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\
✔✔collateral that can be used to secure a loan. |\ |\ |\ |\ |\ |\ |\ |\
Two ways for a financial institution to secure its financing
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
position using assets: - CORRECT ANSWERS ✔✔Fixed
|\ |\ |\ |\ |\ |\ |\
Charge: (Land, Buildings, Machinery)
|\ |\ |\
• Attaches to a specific item of the company's property.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
• The lender has legal right to the asset.
|\ |\ |\ |\ |\ |\ |\ |\ |\
• The charge fixes to the asset.
|\ |\ |\ |\ |\ |\
Floating Charge: (Inventory, A/R, Marketable securities)
|\ |\ |\ |\ |\
• Attaches to a general class of assets.
|\ |\ |\ |\ |\ |\ |\ |\
• Borrower can trade its assets during the ordinary course
|\ |\ |\ |\ |\ |\ |\ |\ |\
of business.
|\ |\ |\
