All of the following are purposes of internal risk rating systems except: Group of answer choices D. Pricing and trading of loans. B. Setting of limits and acceptance or rejection of new transactions. C. Inadequacy of loan reserves. A. Monitoring of credit quality.

Q: What are industry benchmarks, and why are they used in the credit evaluation process?

A: The answer for the question on the industry benchmarks used in the credit evaluation process is…

Q: What is the status of a lender on collateral if they fail to perfect their security interest? What…

A: A security interest in an asset that cannot be claimed by any other party is called a perfected…

Q: Which of the following charges would NOT be subject to any error tolerance factor in the Loan…

A: Tolerance error in the loan estimate This means that a fee is deemed to be in "good faith" if the…

Q: Systemic risk is a) credit risk. b) an insurance contract against the default of one or more…

A: Systemic risk refers to the risk of widespread disruption or collapse of an entire financial system…

Q: Credit scoring is a process used to   Multiple Choice   determine what interest rate to charge a…

A: Credit score : it is a number between 300 - 850 which depicts consumers creditworthiness.

Q: The creation of different payment tranches in a CMO allows investors to better tailor their…

A: CMO creates tranches with various bond classes.

Q: Methods/instruments that banks use to hedge the risks pertaining loans

A: Main function of a bank is to accept deposit and then offer loans as both individual and business…

Q: Explain CECL (“Current Expected Credit Loss”) model.

A:

Q: Off-Balance Sheet Activities do not have a direct impact on the financial stability or risk of a FI.…

A: Off-Balance Sheet Activities  are those assets and liabilites that do not appear on the balance…

Q: If bad credit risks are the ones who most actively seek loans and, therefore, receive them from…

A: In this scenario, bad credit risks actively seeking loans create a situation where the lender…

Q: What are the main risks that credit ratings reflect? Do we need credit ratings? What are the…

A: The credit ratings reflect these main risks :  Credit risk or Repayment risk Liquidity risk  Market…

Q: Financial Institutions have Off-Balance-Sheet acitivities mainly (Commitment Loans; Letter of…

A: Potential Advantages: 1. Off-balance-sheet activities can help financial institutions reduce their…

Q: IFRS requires all of the following when classifying receivables except Select one: O a. Indicate the…

A: The accounts receivable are the amount due from the customer for the credit sales. The company makes…

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.