Question

describe the risk profile for mortgages and credit card loan.

describe the risk profile for mortgages and credit card loan.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Major risk which needs to be assessed is borrowers credit risk, this can be understood by few data points which include

  • His credit score, Financial status
  • By considering his existing cash flows and expenses, EMI
  • Family status
  • Purpose of the loan
  • Default history
  • Number of loans outstanding
  • Debt to income ration which analyses the amount of income client is contributing towards loans

The client needs to have a good repayment history, low EMI ratio compared to income

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Distinguish between credit risk of individual loans and the credit risk of loan portfolios. How are...
Distinguish between credit risk of individual loans and the credit risk of loan portfolios. How are they related?
For the best terms on a loan or credit card, you need a credit score above...
For the best terms on a loan or credit card, you need a credit score above 700. To achieve this, start establishing credit now. Pay all of your bills on time. In addition, use only one-third of your available credit limit and pay off your revolving balance(s) each month. R. J. Johnson has excellent credit. She wants to purchase a piece of equipment for her business and was offered 5% for 48 months for the $48,000 unit. What is her...
1. The Basel 2 risk weighting factor for a bank loan Australian company withe a Moddy’s...
1. The Basel 2 risk weighting factor for a bank loan Australian company withe a Moddy’s Investors Service rating of C is A: 20% B: 50% C: 100% D: 150% 2. A bank provides a loan of $1 million to a company that has ran A rating. Calculate the dollar value of capital required under the capital adequacy requirements to support the facility. A. $16000. B.$40000 C. $80000 D. 120000 3. Part of bank’s liquidity management means: A. term loans...
True or false? The securitization of mortgages increases the risk that the securitized mortgages will default....
True or false? The securitization of mortgages increases the risk that the securitized mortgages will default. Government securities and reserves are two liabilities of the Federal Reserve System. The Federal Deposit Insurance Corporation instituted risk based premium for deposit insurance since its inception.
Americans have recently accumulated record levels of credit card debt. As a result, the risk of...
Americans have recently accumulated record levels of credit card debt. As a result, the risk of bankruptcy has increased significantly for a large segment of the population. Congress decides that it is necessary to ban credit cards to protect the public from such risk. How would such a ban affect the velocity of money? Explain your answer.
Americans have recently accumulated record levels of credit card debt. As a result, the risk of...
Americans have recently accumulated record levels of credit card debt. As a result, the risk of bankruptcy has increased significantly for a large segment of the population. Congress decides that it is necessary to ban credit cards to protect the public from such risk. How would such a ban affect the velocity of money? Explain your answer.
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate...
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of .5 percent per year, compounded monthly for the first six months, increasing thereafter to 16.8 percent compounded monthly. Assume you transfer the $5,800 balance from your existing credit card and make no subsequent payments. How much interest will you owe at the end of the first year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate...
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 2 percent per year, compounded monthly for the first six months, increasing thereafter to 16 percent compounded monthly. Assuming you transfer the $7,400 balance from your existing credit card and make no subsequent payments, how much interest will you owe at the end of the first year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate...
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 3.3 percent per year, compounded monthly for the first six months, increasing thereafter to 18.2 percent compounded monthly. Assuming you transfer the $16,000 balance from your existing credit card and make no subsequent payments, how much interest will you owe at the end of the first year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Interest...
A commercial bank with a structured loan portfolio as shown below is faced with a spike...
A commercial bank with a structured loan portfolio as shown below is faced with a spike in demand for car loans from individual clients. i. What advice would you give the credit manager as to the impact of the spike on the overall risk profile of the lending portfolio which currently stands at: Motor Vehicle loans: 30% Mortgage loans: 40% Credit Card Advances: 30% ii. What are the risks would you advise the credit manager to consider in the structuring...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT