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Question 1
Correct
Mark 2.00 out of 2.00
Match the topics in the first column with the correct descriptions in the second column below (2 marks)
The amount of risk that an entity is willing to accept, or retain in order to achieve its objectives
Using risk appetite on a more micro level to set acceptable levels of variation around risk appetite.
The chance of something happening that will have an impact on an individual’s or a business’s
objectives.
Risk capacity relates to the amount an organisation is capable of losing before it endangers its own
sustainability.
The guiding principles an organisation uses in relation to its management of risk and the detail of
how these principles will operate in practice.
The policies, systems and controls through which an organisation can establish, set risk limits and
monitor its risk appetite
One of the risk assessment tools that a lender may use to establish the probability of a borrower
defaulting
The threat that a risk poses after considering the current mitigation activities in place to address it
A tool often graphically representing Likelihood and Impact, that can help companies identify and
prioritise the risks associated with their business
Risk Appetite
Risk Tolerance
Risk
Risk Capacity
Risk Management
Risk Appetite Framework
Credit Risk Analysis
Residual Risk
Risk Map
Your answer is correct.
15/11/2023, 14:48
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Question 2
Correct
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Question 3
Correct
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Question 4
Partially correct
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A lender receives a loan application from a business owner. The lender may seek to mitigate their risk exposure through one or
more techniques. Which would not be one of those?
a.
Using the borrower's property as collateral
b.
Insisting on third party guarantees
c.
Using each principal in the business as a guarantor
d.
Request that the business segregate their assets before loan approval
e.
Requiring a loan covenant
f.
Request weekly DSCR reports from the borrower
A licensed broker is required to report significant issues and incidents according to organisational policies and procedures. If a
broker has identified a significant compliance breach by one of his credit representatives, how would he report this?
a.
Complete ASIC’s Reportable Situation Form
b.
Notify the Australian Financial Complaints Authority Free, as the ombudsman’s role is to investigate and resolve issues
c.
A significant compliance breach will be dealt with by The Australian Prudential Regulation Authority (APRA) as they are an
independent statutory authority that supervises institutions across banking
d.
Complete a Breach Report and lodge with the industry body with whom the credit representative is registered
A negative consequence of a risk occurring, with impact on stakeholders or assets, would be unlikely to include which 2 of the
following:
a.
Environmental damage
b.
Decline in profits
c.
Increase in regulator scrutiny
d.
A competitor leaving the market
e.
Increase in clients seeking high LVR loans
f.
Implementation of increased risk controls
15/11/2023, 14:48
Learning Activity 2: Attempt review
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3/7
Question 5
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Question 6
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Question 7
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Credit Risk and the probability of a default is one of the main risks for lenders. What is one of the risk assessment tools that a lender
may use to establish that probability.
a.
A Credit Risk Analysis
b.
Increase to LMI premiums
c.
A Physical Risk Analysis
d.
Using a Credit Analyst as a contractor for difficult borrowers
e.
Inviting all stakeholders to annual meetings
From a lender’s point of view, a default is said to occur when
a.
A borrower is unable to meet their loan repayment obligations
b.
A business borrower has consistently met their loan repayment obligations
c.
An individual borrower is able to meet their loan repayment obligations.
d.
The lender projects the borrower’s risk of repayment obligations for the next 5 years
e.
When the credit exposure of a loan is transferred to a second party
Not all identified risks will require intervention. Some risks will just require timed review and monitoring. For an established business,
which of the following would be considered the highest risk in relation to potential competitors who may enter their market and
produce a competitive product?
a.
A market with no barriers to entrance and very low product costs
b.
A market with low start-up costs for market launching and easy access to markets
c.
High start-up costs and limited access to markets
d.
High barriers to entering the market
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4/7
Question 8
Correct
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Question 9
Correct
Mark 1.00 out of 1.00
Question 10
Correct
Mark 1.00 out of 1.00
Risk assessment focuses on what can happen, while risk sourcing focuses on why, how and where the risk occurs. Choose three
from below which an established broker would consider to be a current source of risk.
a.
Deficiency in the business's compliance paperwork
b.
Inadequate communication skills of manager/s
c.
Financial overextension
d.
Profit goal at 5 years not reached
e.
Unemployment predicted to be 2% higher in coming year
f.
Foreign-owned lending institutions set to increase in number
g.
Appropriate and realistic performance expectations
h.
Avoidance of self-employed clients due to complexity
i.
All of the above
Risks commonly encountered in business can be broadly categorised as follows:
a.
Financial Risk, Employee Risk, Physical Risk, Legislative Risk
b.
Strategic Risk, Operational Risk, Financial Risk, Physical Risk, Legal Risk
c.
Financial Risk, Physical Risk, Collateral Risk, Legal Risk
d.
Credit Risk, Legal Risk, Physical Risk, Company Risk, Liquidity Risk
Risks commonly encountered in businesses can be broadly categorised as Strategic Risk, Operational Risk, Physical Risk, Legal
Risk and Financial Risk. Which of these risk categories is the risk arising from failure to comply with statutory or regulatory
obligations?
a.
Strategic
b.
Environmental
c.
Physical
d.
Legal
e.
Financial
15/11/2023, 14:48
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Question 11
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Question 12
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Question 13
Correct
Mark 1.00 out of 1.00
To mitigate the possibility of risk events eventuating, when a business manager undertakes a “spot check” what might they be
looking for?
a.
Insurance policies are in place, current and adequate
b.
Social media presence is adequate following increase in competition
c.
Training of all staff has met industry requirements
d.
Wages and reward schemes are meeting expectations
e.
Security of data is being maintained through adequate software
f.
All of the above
Under General Conduct Obligations a credit licensee is required to maintain adequate risk management systems and have available
adequate resources (including financial, technological and human resources). This ensures which of the following:
a.
Compliance with licensee obligations: s47(1) of the National Credit Act
b.
Compliance with ASIC’s RG78
c.
That Professional Indemnity insurance compliance is not breached
d.
That potential fraud or negligence will be dealt with by APRA
Using a Risk Map gives us a visual for which one of these?
a.
The Probability being the likelihood of an event occurring and the consequences being the impacts of the risk if it
occurred
b.
For proving through a diagram that all identified risks will require intervention
c.
A geographical representation of where business franchises are located on a map
d.
To assist companies to prioritise the risks associated with the actions of their competitors
e.
To determine the Residual Risks a company faces
15/11/2023, 14:48
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Question 14
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Question 15
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Question 16
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Question 17
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When it comes to fixed and variable loans, which of the following cost structures would generally be considered the LOWEST risk?
a.
Fixed costs that are higher than variable costs
b.
Very high fixed costs and very low variable costs
c.
Variable costs that are higher than fixed costs
d.
Both high variable costs and high fixed costs
When reviewing your own area of business operation which of the following should be taken into consideration?
a.
How to improve the identification of risks and communicate areas of concern to stakeholders
b.
How to manage risk sources
c.
How to assess risk and implement controls
d.
All of the above
A limited number of suppliers may impact a business unfavourably?
Select one:
True
False
A risk map should not be kept private but provided to appropriate stakeholders as required.
Select one:
True
False
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7/7
Question 18
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Question 19
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Question 20
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Question 21
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Mark 1.00 out of 1.00
Financial performance means generating new resources from day to day operations over a period of time
Select one:
True
False
Financial position is the business’s set of financial resources and obligations at a point in time
Select one:
True
False
Financial statements are the reports describing financial performance and position
Select one:
True
False
Notes are part of the statements, adding explanations and interpretations of the numbers
Select one:
True
False
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A newspaper editor starts a retirement savings plan in which $225 per month is deposited at the beginning of each month into an account that earns an annual interest rate of 6.4% compounded monthly.
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9. You are going to buy your first house, you have saved $4,000 to put down and
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Andres is offered a job as manager of a health club. The job will pay $3,100 per
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(Learning Objective 3: Record note payable transactions) Dean Sales Companycompleted the following note payable transactions:2018Jul Purchased delivery truck costing $58,000 by issuing aone-year, 4% note payable.Dec 31 Accrued interest on the note payable.2019Jul 1 Paid the note payable at maturity.1Requirements1. How much interest expense must be accrued at December 31, 2018? (Round your answerto the nearest whole dollar.)2. Determine the amount of Dean Sales’ final payment on July 1, 2019.3. How much interest expense will Dean Sales report for 2018 and for 2019? (If needed,round your answer to the nearest whole dollar.)
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Salma wants to save money to open a tutoring center. She buys an annuity with a monthly payment of $27 that pays 3.7% interest, compounded
monthly. Payments will be made at the end of each month. Find the total value of the annuity in 10 years.
Do not round any intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas.
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(Learning Objective 3: Account for a short-term note payable) Jamison SportsAuthority purchased inventory costing $25,000 by signing a 12%, six-month, short-term notepayable. The purchase occurred on January 1, 2018. Jamison will pay the entire note (principaland interest) on the note’s maturity date of July 1, 2018. Journalize the company’s (a) purchaseof inventory and (b) payment of the note plus interest on July 1, 2018.
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Your grandfather has agreed to deposit a certain amount of money each year into an account paying 7.90 percent annually to help you
go to graduate school. Starting next year, and for the following four years, he plans to deposit $2,350, $8,600, $7,200, $6,600, and
$12,150 into the account. How much will you have at the end of the five years? (Round answer to 2 decimal places, e.g. 15.25.)
Future value at end of five years
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