Question

6) The credit scoring technique is:

A) Quantitative

B) Qualitative

C) Both quantitative and qualitative

D) None of the above

7) In which of the following situations a firm will be likely to default:

A) Z score is equal to 1.87

B) Z score is equal to 1.80

C) Z score is equal to 2.99

D) Z score is equal to 0.88

8) External Factors Affecting Lending Decisions:

A) Legislation; Industry-specific factors

B) Meeting “Five Cs”

C) Macroeconomic factors (Inflation, unemployment, GDP etc.)

D) Loan Budget and Staff Availability

E) Only A and C of the above

9) Consortium of lenders provides funding in Modern Forms of Advance for businesses is called:

A) Equity Participation

B) Loan Syndication

C) Equipment Leasing

D) Factoring

E) All of the above

10) If a lender is looking if the borrower have sufficient cash flows to support the loan repayments which of the 5 C’s of lending is he/she assessing?

A) Character

B) Capacity

C) Cash

D) Conditions

E) Collateral

Answer 1

6) Both qualitative and quantitative ,Banks grant loans based on a credit scoring model that combines qualitative and quantitative

7) when z score is equal to 0.88. the lower the score, the higher the odds are that a company is heading for bankruptcy.

8) only A and C

9)Loan syndication is the process of involving a group of lenders in funding various portions of a loan for a single borrower. Loan syndication most often occurs when a borrower requires an amount too large for a single lender to provide or when the loan is outside the scope of a lender's risk-exposure levels

10)Capacity measures the borrower's ability to repay a loan by comparing income against recurring debts and assessing the borrower's debt to income