This quiz works best with JavaScript enabled. Home > Risk Management > Credit Risk Management – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Credit Risk Management Quiz 4 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Pre sanction credit process can be classified into how many stages? A) 1. B) 2. C) 4. D) 3. Show Answer Correct Answer: D) 3. 2. The function of Credit Risk Management is: A) Carrying out the check and balance function in the form of providing credit risk studies on proposals for granting credit/financing with certain specified criteria. B) Carry out an initial assessment of the feasibility of a transaction/exposure/claim that contains credit risk. C) Carry out administrative management of transactions/exposures/bills that contain credit risk. D) B and C Correct. Show Answer Correct Answer: A) Carrying out the check and balance function in the form of providing credit risk studies on proposals for granting credit/financing with certain specified criteria. 3. Which statement is correct about the credit portfolio risk measurement model? A) This model helps build an appropriate organizational model for the entire banking system. B) This model helps banks increase the number of customers using credit cards. C) This model brings together many calculation techniques, mainly using statistical probability. D) All of the above ideas are correct. Show Answer Correct Answer: C) This model brings together many calculation techniques, mainly using statistical probability. 4. Credit risk provision costs: A) Is an item on the Balance Sheet that indicates the total available resources that can reverse bad debts. B) Is a non-cash expense on the Income Statement that reflects the value of provision in the reporting period for bad debts. C) An item in the Income Statement that indicates the profit or loss value of securities trading activities. D) All is incorrect. Show Answer Correct Answer: B) Is a non-cash expense on the Income Statement that reflects the value of provision in the reporting period for bad debts. 5. What types of mistakes often occur during the decision and signing stage of credit contracts? A) Loan approval without analysis and appraisal. B) Approve loans to bad customers. C) Refuse to lend to good customers. D) Answers B and C. Show Answer Correct Answer: D) Answers B and C. 6. The function of Credit Risk Management in providing credit risk analysis does not apply to: A) Extension of credit/financing. B) Credit/Financing guaranteed by Insurance/Guarantee Companies. C) Credit/Financing with cash collateral. D) A, B and C are correct. Show Answer Correct Answer: D) A, B and C are correct. 7. Lending policy setting the basic standards and procedures to A) Standards for individual credit assessment. B) Composition of the loan portfolio. C) Procedures governing compliance with loan related policies deregulations. D) Identify and administer problem credits. Show Answer Correct Answer: B) Composition of the loan portfolio. 8. Which is not framework under Maintenance of adequate policies and procedures A) Problem credits. B) Sets risk tolerance levels. C) Asset quality. D) Guide banking's credit granting activities. Show Answer Correct Answer: A) Problem credits. 9. Adjustments to the Credit Risk Management Implementation Guidelines include additional provisions related to A) Implementation of Credit Risk Management. B) Implementation of Credit Review. C) Establishment of a Risk Policy Group. D) A and B are correct. Show Answer Correct Answer: A) Implementation of Credit Risk Management. 10. Under Nayak committee's Turnover method for working capital, the current ratio is A) 1.33:1. B) 1.25:1. C) 1:1. D) 0.9:1. Show Answer Correct Answer: B) 1.25:1. 11. Which of the following are the 3 Types of Risk Management? A) 1. Systematic Risk2. Unsystematic Risk3. Regulatory Risk. B) 1. Cluster Risk2. Groupings Risk3. Family Risk. C) 1. Basic Risk2. Moderate Risk3. Hard Risk. D) NO ANSWER. Show Answer Correct Answer: A) 1. Systematic Risk2. Unsystematic Risk3. Regulatory Risk. 12. Which of the following IS A Principle of LENDING? A) Security. B) Funds. C) Money. D) Revenue. Show Answer Correct Answer: A) Security. 13. Competent Personnel have a complete understanding of the risks associated with the banking institution credit activities A) True. B) False. Show Answer Correct Answer: A) True. 14. Which of the following factors directly affects the effective interest rate of the loan? A) Clearing deposit balance. B) How customers pay interest to the bank. C) Commitment fee. D) All answers printed above. Show Answer Correct Answer: D) All answers printed above. 15. Which among the following is a tool to measure the Credit Risk embedded in a loan asset? A) Invocation of Insurance. B) Credit Risk Rating. C) Loan Pricing. D) None of the above. Show Answer Correct Answer: B) Credit Risk Rating. 16. Which of the following is not a basic condition for implementing diversification in credit portfolio structure? A) The portfolio must include a large number of credits of relatively small value. B) The credits on the portfolio must be independent, less dependent on each other. C) The credits on the portfolio must generate high returns. D) Both A and B. Show Answer Correct Answer: C) The credits on the portfolio must generate high returns. 17. Multiple borrowing without Bank's consent is viewed as ..... A) Financial Indiscipline. B) Ne need to obtain consent. C) It is permitted by RBI. D) None of the above. Show Answer Correct Answer: A) Financial Indiscipline. 18. Which one is the typical credit process would involve under Business Origination A) Disbursement and receipts. B) Internal control and audit. C) Credit policy and process review. D) Credit appraisal and review. Show Answer Correct Answer: D) Credit appraisal and review. 19. Which is not an example of typical credit process A) Credit administration and monitoring. B) Credit recovery. C) Credit organization. D) Credit origination. Show Answer Correct Answer: C) Credit organization. 20. Lessons Learned from Silicon Valley Bank (SVB), financing problems in the Start Up Industry in the business cycle fall into the category A) Concept Creation. B) Young Operation. C) Middle Aged Operation. D) Development. E) Declining Operation. Show Answer Correct Answer: D) Development. ← PreviousNext →Related QuizzesCredit Risk Management Quiz 1Credit Risk Management Quiz 2Credit Risk Management Quiz 3Credit Risk Management Quiz 5Enterprise Risk Management QuizOperational Risk Management Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books