This quiz works best with JavaScript enabled. Home > Risk Management > Credit Risk Management – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Credit Risk Management Quiz 5 (14 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. In credit risk measurement models, which of the following parameters reflects the level of credit risk related to borrowers? A) Amount at risk at time of default (EAD). B) Loss on default (LGD). C) Probability of default (PD). D) Validity rollover period (M). Show Answer Correct Answer: C) Probability of default (PD). 2. As per Regulatory Guidelines, upto which level in a Rating Scale, the rating shall represent an acceptable level of Credit Risk? A) Levels 1 to 3. B) Levels 1 to 4. C) Levels 1 to 5. D) Levels 1 to 7. Show Answer Correct Answer: C) Levels 1 to 5. 3. In working capital accounts which among the given ratios is used to assess Financial Risk? A) Debt Equity Ratio. B) Debt Service Coverage Ratio. C) Current Ratio. D) All of the Above. Show Answer Correct Answer: C) Current Ratio. 4. Bro. Syukra, a customer of the Ujung Gading Branch Office, applied for a working capital credit for a TBS trading business with a ceiling of IDR 4, 000, 000, 000 (four billion rupiah). The NPL for productive credit at the Ujung Gading Branch was 13.32% and the NPL for the trade sector was 17.84%. The limit of authority to decide on the Ujung Gading Branch Office is IDR 1, 000, 000, 000 (one billion rupiah). Regarding the customer credit approval process, is it necessary for the Ujung Gading Branch Office to request a risk assessment from the Risk Management Division? A) KC requested a risk study from the Risk Management Division. B) KC did not request a risk review from the Risk Management Division. Show Answer Correct Answer: B) KC did not request a risk review from the Risk Management Division. 5. What banking institutions should take into consideration when in assessing the acceptability of collateral? A) Governing compliance with loan related policies. B) Composition of the loan portfolio. C) Ease of disposal of the collateral. D) Aggregate size of the general collateral that the banking institution holds. Show Answer Correct Answer: C) Ease of disposal of the collateral. 6. Credit/financing criteria that require a credit risk study are, among others, except: A) Credit/Financing which is the authority of the Division and Directors. B) Productive credit/financing (new and/or additional) which is the authority of the branch with the condition that the Branch Productive NPL (NPF) percentage is 10% or more and the Economic Sector NPL (NPF) percentage is 10% or more with a predetermined total ceiling. C) All credit/financing submitted by the Customer. D) A and B are correct. Show Answer Correct Answer: C) All credit/financing submitted by the Customer. 7. Leson Learned from Signature Bank and Silvergate Bank problems in credit financing concentrated on A) Startup Industry. B) Crypto Industry. C) Wholesale Banking. D) Construction Lending. E) Property. Show Answer Correct Answer: B) Crypto Industry. 8. Which of the following departments does not directly participate in the 3 lines/circles of control in the bank's credit granting activities: A) Credit. B) Risk management. C) Accounting transaction. D) Internal audit. Show Answer Correct Answer: C) Accounting transaction. 9. KYC guidelines are applicable to A) Only for some borrowal accounts. B) To all borrowal accounts. C) Only to deposit accounts. D) None of the above. Show Answer Correct Answer: B) To all borrowal accounts. 10. Branch Offices (risk Owners) are responsible for the management and control of risks inherent in daily activities in carrying out their business or functions, including credit activities. Branch offices in the bank defense system model are included in the A) Secondline of Defence. B) Thirdline of Defence. C) Firstline of Defence. D) Fourthline of Defence. E) Fifthline of Defence. Show Answer Correct Answer: C) Firstline of Defence. 11. DEFINITION:WHAT IS FINANCIAL PLANNING? A) The process of raising funds or capital for any kind of expenditure. B) That takes out a loan from a bank under an agreement to pay it back later, typically with interest. C) Encompasses the identification, analysis, and response to risk factors that form part of the life of a business. D) A business enterprise or speculation in which something is risked in the hope of profit. Show Answer Correct Answer: A) The process of raising funds or capital for any kind of expenditure. 12. The process of "credit recovery" should be performed independently of groups involved in the other credit processes A) True. B) False. Show Answer Correct Answer: B) False. 13. DEFINITION:WHAT IS CREDIT? A) The act or art of managing. B) A process where funds are utilized as commodity to generate revenue. C) Has replaced bartering as the primary means of exchanging goods and services in the modern world. D) The process of raising funds or capital for any kind of expenditure. Show Answer Correct Answer: B) A process where funds are utilized as commodity to generate revenue. 14. Which of the following is the CORRECT steps/process of accounting? A) Book of Accounts-Reports-Recording-Vouchers and Supporting Documents. B) Vouchers and Supporting Documents-Reports-Book of Accounts-Recording. C) No correct answer. D) Recording-Book of Accounts-Reports-Vouchers and Supporting Documents. Show Answer Correct Answer: D) Recording-Book of Accounts-Reports-Vouchers and Supporting Documents. ← PreviousRelated QuizzesCredit Risk Management Quiz 1Credit Risk Management Quiz 2Credit Risk Management Quiz 3Credit Risk Management Quiz 4Enterprise Risk Management QuizOperational Risk Management Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books