Credit Analysis I

What are the three major questions the credit department must answer regarding each loan application?

• Is the borrower reliable? Can the loan be extended? Can the lender recover the loan?

• Is the borrower creditworthy? How do you know? Can the loan agreement be properly structured? Can the lender perfect its claim?

• Is the borrower trustworthy? Can the loan be approved quickly? Can the lender provide additional funds?

• Is the borrower creditworthy? Can the loan agreement be properly structured? Can the lender perfect its claim?

What is the goal of completing a credit analysis?

• To examine the nature of the borrower's business and identify risks

• To evaluate the borrower's personal life

• To increase the interest rates for the borrower

• To maximize profits for the lender

What is the difference between default risk and credit risk?

• They are the same

• Credit risk is broader than default risk

• They are unrelated terms

• Default risk is broader than credit risk

What was the underlying reason for the Global Financial Crisis in 2008-2009?

• Increase in real estate prices

• Stable financial institutions

• Decrease in subprime borrowers

• Carelessness in evaluating mortgage borrowers' creditworthiness

Where can credit officers gather information for credit risk assessment?

• Social media platforms

• Government agencies and industry peers

• Entertainment websites

• Online shopping websites

What does the 5Cs framework in credit analysis stand for?

• Character, Capacity, Collaterals, Capital, Conditions

• Credit, Cash, Collaterals, Capital, Conditions

• Character, Credit, Collaterals, Capital, Conditions

• Character, Capacity, Credit, Capital, Conditions

What does the 'Character' component of the 5Cs framework represent?

• Borrower's qualities for loan repayment

• Borrower's credit history

• Borrower's collateral

• Borrower's cash flow

What is considered as 'Collaterals' in the 5Cs framework?

• Borrower's job stability

• Borrower's cash flow

• Borrower's credit history

• Borrower's personal assets

What does the 'Capital' component of the 5Cs framework refer to?

• Borrower's loan agreement

• Borrower's repayment capacity

• Borrower's contribution to reduce risk

• Borrower's borrowed funds

What does the CAMPARI framework focus on?

• Assessing business risks

• Assessing consumer loan applications

• Assessing mortgage borrowers

• Assessing investment opportunities