FCA 131 Exam QUESTIONS WELL ANSWERED|35 PAGES|2024

Weighted Average Cost of Capital (WACC) for a firm is the: - ️️rate of return a firm must earn on its existing assets to maintain the current value of its stock The three C's of credit are: a) Character, capital and charity b) Character, capacity and charity c) Charity, capital and censor d) Character, capacity and capital e) Capital, capacity and conciliate - ️️d) Character, capacity and capital Character refers to the borrower's reputation. Capacity refers to the borrower's ability to repay a loan. Capital refers to the borrower's assets. The lenders want to know if the borrower's assets could be used to repay credit debts if income is unavailable. An established credit rating can be damaged if: a) A person has no collateral. b) A borrower fails to live up to the repayment terms of an agreement. c) A person's income increases. d) A person's expenses decrease. e) None of the above - ️️b)A borrower fails to live up to the repayment terms of an agreement In order to maintain a good credit rating, it is important to pay your credit card bills on time A person or business that is owed money is a _______________. a) Creditor b) Debtor c) Investor d) Financial institution e) None of the above - ️️a) creditor If Bank A has a CAR of 10%, it has enough capital to cushion potential losses and protect depositors' money as Basel III requires a capital adequacy ratio of at least what percent? - ️️8% Credit spread risk can be described as the risk that the price of a bond will ______. A. decline due to an increase in the credit spread B. decline due to a decrease in the credit spread