Question

1.

For banks that are asset sensitive, margin change follows in the opposite direction of rates:

True

False

2.

Current Expected Credit Loss ("CECL") accounting requires only accruing losses incurred as of the date of financial reporting:

True

False

3.

The FASB believes CECL provides users with more useful/relevant information:

True

False

4.

By its very nature, a probable incurred loss model will have higher loss reserves recorded at loan inception as compared to a life-of-loan (CECL) model:

True

False

5.

CECL methodology allows a lender to segment its portfolio in different ways to better estimate losses:

True

False

Answer 1

Answers of the above questions are given below.

1.For banks that are asset sensitive, margin change follows in the opposite direction of rates:

Ans: TRUE

2. Current Expected Credit Loss ("CECL") accounting requires only accruing losses incurred as of the date of financial reporting:

Ans: TRUE

3. The FASB believes CECL provides users with more useful/relevant information:

Ans: TRUE

4. By its very nature, a probable incurred loss model will have higher loss reserves recorded at loan inception as compared to a life-of-loan (CECL) model:

Ans: FALSE

5. CECL methodology allows a lender to segment its portfolio in different ways to better estimate losses:

Ans: TRUE