This quiz works best with JavaScript enabled. Home > Risk Management > Credit Risk Management – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Credit Risk Management Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. When applying the basic internal credit rating (FIRB) method to measure risk in credit activities, banks need to estimate which of the following parameters? A) Amount at risk at time of default (EAD). B) Probability of default (PD). C) Loss on default (LGD). D) Validity rollover period (M). Show Answer Correct Answer: B) Probability of default (PD). 2. What is the net working capital ( margin) requirement under second method of lending prescribed by Tandon Committee? A) 25% of total current assets. B) 25% of total assets. C) 25% of working capital gap. D) 20% of Projected Annual Turnover. Show Answer Correct Answer: A) 25% of total current assets. 3. Which of the following affects transaction risk in credit activities? A) Analyze customers to decide whether to lend/not lend. B) Determine the maximum loan balance ratio for each industry. C) Analyze customers to decide on secured loans/unsecured loans. D) All the answers above. Show Answer Correct Answer: D) All the answers above. 4. Reputation and Standing of a Promoter is assessed as part of which Parameter under Credit Risk Rating? A) Management Risk. B) Industry Risk. C) Business Risk. D) Financial Risk. Show Answer Correct Answer: A) Management Risk. 5. WHAT ARE THE 3 MAIN FUNCTIONS OF THE BOARD OF DIRECTORS? A) 1. Strategic Planning2. Direction Setting3. Policy Formulation. B) 1. Organizing2. Staffing3. Controlling. C) 1. Structure2. Continuity3. Accountability. D) 1. System2. Ideals3. Relationship. Show Answer Correct Answer: A) 1. Strategic Planning2. Direction Setting3. Policy Formulation. 6. What is not included in credit risk is A) Concentration of credit distribution in certain sectors. B) Interest rate hike. C) Risk course. D) Determination of fixed flat interest. E) The end of fixing fixed interest rates and switching to floating interest rates specifically for mortgage loans. Show Answer Correct Answer: D) Determination of fixed flat interest. 7. The Pasar Raya Branch Office is processing credit with a total ceiling of IDR 1, 500, 000, 000, -(one billion five hundred million rupiah) with a KPR-MG scheme of IDR 1, 000, 000, 000, -(one billion rupiah) and KRK of IDR 500, 000, 000, -(five hundred million rupiah) with the productive NPL condition of the Pasar Raya Branch above 10%, regarding this condition, is it necessary for the Pasar Raya Branch to request a study from the Risk Management Division? A) Request a risk assessment from the MR Division. B) No need for risk assessment. Show Answer Correct Answer: B) No need for risk assessment. 8. One of your Borrower Customer failed to service monthly interest in his working capital account. Which among the following is correct about the type of risk the Bank is facing in this context? A) Fraud Risk. B) Interest Rate Risk. C) Market Risk. D) Credit Risk. Show Answer Correct Answer: D) Credit Risk. 9. Which among the following is not a Credit Information Company in India? A) CIBIL. B) Moodys. C) Experian. D) Equifax. Show Answer Correct Answer: B) Moodys. 10. Cash Budget Method of assessment of WC Limits is used in: A) Sugar Industry Tea Industry, Construction Industry. B) Oil industry Tea industry, construction industry. C) Sugar Industry Coffee Industry, Construction Industry. D) Sugar Industry Tea Industry, Cement Industry. Show Answer Correct Answer: A) Sugar Industry Tea Industry, Construction Industry. 11. The current Law on Credit Institutions stipulates that lending to one customer must not exceed A) 15% of the bank's equity capital and reserve fund. B) 25% of the bank's equity capital and reserve fund. C) 15% of the bank's equity capital. D) All of the above sentences are wrong. Show Answer Correct Answer: A) 15% of the bank's equity capital and reserve fund. 12. Which of the following forms of credit is classified as off-balance sheet risk assets of commercial banks? A) Factoring. B) Loan commitment. C) Bank guarantee. D) Financial leasing. Show Answer Correct Answer: C) Bank guarantee. 13. Which statement below is correct: A) Credit risk is the situation in which the borrower violates commitments, causing the bank to not fully collect principal and interest on the loan. B) Credit risk is the phenomenon of borrowers intentionally delaying principal and interest payments. C) Credit risk is the possibility that a bank's partner will not comply with the commitments agreed with the bank. D) All of the above. Show Answer Correct Answer: A) Credit risk is the situation in which the borrower violates commitments, causing the bank to not fully collect principal and interest on the loan. 14. Which of the following IS NOT a Board Area of Credit Management? A) Credit Allocation. B) Credit Special. C) Credit Evaluation. D) Credit Discipline. Show Answer Correct Answer: B) Credit Special. 15. Which among the following is not a Parameter used for Credit Risk Rating architecture? A) Industry Risk. B) Basis Risk. C) Business Risk. D) Management Risk. Show Answer Correct Answer: B) Basis Risk. 16. In accordance with the SOTK of Bank Nagari Head Office, the Credit Risk Management function is in the division A) Credit and Micro Banking Division. B) Credit Rescue Division. C) Risk Management Division. D) Sharia Business Division. Show Answer Correct Answer: C) Risk Management Division. 17. The renewal of M/s. Consum Trading Pvt. Ltd. has fallen due. The company has submitted it Audited Balance Sheet as on 31.03.2018. However, the audited Balance Sheet is not yet uploaded at the website of Ministry of Corporate Affairs. In such case, what process will be followed for independent verification of audited Balance Sheet? A) Confirmation should be obtained from the Chartered Accountant firms who has audited the Balance Sheet on phone. B) Signed Copy of Audited Balance Sheet to be obtained. C) Independent confirmation should be obtained from the Chartered Accountant firms who has audited the Balance Sheet by email / Fax / Letter. D) None of the Above. Show Answer Correct Answer: C) Independent confirmation should be obtained from the Chartered Accountant firms who has audited the Balance Sheet by email / Fax / Letter. 18. The 2nd Function of Credit is? A) Financial. B) Liquidity. C) Capital. D) Interest. Show Answer Correct Answer: B) Liquidity. 19. Which among the following suits most the description "Possibility of Losses associated with the Credit quality of a Borrower" ? A) Funding Risk. B) Call Risk. C) Basis Risk. D) Credit Risk. Show Answer Correct Answer: D) Credit Risk. 20. Which among the following is a not a Credit Risk? A) Default Risk. B) Counterparty Risk. C) Fraud Risk. D) Portfolio Risk. Show Answer Correct Answer: C) Fraud Risk. ← PreviousNext →Related QuizzesCredit Risk Management Quiz 1Credit Risk Management Quiz 3Credit Risk Management Quiz 4Credit Risk Management Quiz 5Enterprise Risk Management QuizOperational Risk Management Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books