Question 20

Question 201 Point

A project may be financed with debt or equity.

True

False

Clear selection

Question 19

Question 191 Point

Which of the following is not correct regarding the cost of capital?

The cost of capital depends on the debt-to-equity ratio.

The cost of capital is tax deductible.

Cost of capital should not be a determinant of whether or not a project is good or poor.

None of the above.

Question 18

Question 181 Point

Which of the following is not correct regarding individual credit?

Individuals with excellent credit scores receive favorable terms.

Individuals with moderate credit scores will not receive credit.

Failure to manage one's credit history precipitates loss ratios.

A credit score is used to determine terms of agreement.

Question 17

Question 171 Point

Which of the following is not correct regarding bonds?

Bonds can be used to raise funds for organizations.

Bonds consist of marketable debt securities.

Bond markets are easy to access.

Interest payments on bonds tend to be lower than commercial loans.

Question 16

Question 161 Point

Which of the following is not correct for uses of commercial credit?

It may fianc operations.

It may purchase equipment.

It can fund student loans.

It can enhance technical infrastructure.

Question 15

Question 151 Point

Which is correct?

Bond markets are easy to access.

Bond ratings are determined by SEC.

Bond markets are difficult to access.

A firm's high debt rating is likely to increase bond ratings.

Question 14

Question 141 Point

Which credit score models are typically created in-house and use data collected from a unique population of credit applicants?

Pooled Models

Credit Bureau Scores

Custom Model

Basel Model

Question 13

Question 131 Point

Which credit scoring models are created by outside vendors and use data collected from a variety of lenders?

Pooled Models

Credit Bureau Scores

Custom Model

Basel Model

Question 12

Question 121 Point

Which of the following is considered the most popular and reliable credit scoring model with the best track record of accurately assessing risks?

Pooled Models

Credit Bureau Scores

Custom Model

Basel Model

Question 11

Question 111 Point

What of the following is not true of a credit score?

It is a three-digit numerical expression to reflect a customer's credit worthiness.

There are a variety of credit scoring models.

Credit scores can vary by hundreds of points depending on the model used.

Credit scores eliminate risk for the lender.

Question 10

Question 101 Point

An increase in loss ratios results in a decrease in profitability.

True

False

Clear selection

Question 9

Question 91 Point

Which of the following is not a credit risk to banks?

Foreign exchange transactions

Cash deposits

Credit derivatives

Cash management services

Question 8

Question 81 Point

Which of the following is correct regarding the inherent risks of retail banks?

They make large loans that can impact their survival if the borrowers default.

They make many smaller loans which, if the borrowers default, rarely results in bank failure.

They make significant commercial loans that have high risk.

All of the above.

Question 7

Question 71 Point

Which 2010 agreement is an international regulatory accord to improve supervision, regulation, and risk management in the banking sector?

Basel III

Federal Reserve Mandate 15

Basel I

None of the above

Question 6

Question 61 Point

Which is not part of the consumer loan category?

Personal loans

Mortgages

Stocks

Credit cards

Question 5

Question 51 Point

Which of the following is another common name for retail credit?

Commercial loans

Consumer loans

Securities

None of the above

Question 4

Question 41 Point

Which is not a factor for assessing credit score for a client?

Whether to extend a line of credit

The terms of the agreement

The rate of interest

Demographic profile

Question 3

Question 31 Point

What is a common way financial institutions assess an individual's credit worthiness?

Line of credit

Credit score

Credit limit

Creditability

Question 2

Question 21 Point

What is the risk a financial institution undergoes when a customer defaults on a loan?

Risk of loss

Decrease in profitability

Both a and b

None of the above

Credit risks are categorized as consumer and commercial risks.

True

False

Clear selection