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Finance 1

Total questions: 19

Worksheet time: 11mins

Name
Class
Date
1.

Which term refers to the potential for a portfolio's heavy concentration in a specific asset or sector to result in significant losses?

a)

Credit Risk

b)

Market risk

c)

Liquidity risk

d)

Concentration risk

2.

Which term refers to the potential for changes in interest rates to impact the value of investments or the cost of borrowing?

a)

Credit risk

b)

Market risk

c)

Liquidity risk

d)

Interest rate risk

3.

Which term refers to the potential for a lack of marketability or difficulty in converting an investment into cash without causing significant price discounts?

a)

Credit risk

b)

Market risk

c)

Liquidity risk

d)

Concentration risk

4.

Which term refers to the potential for poor decision-making practices to adversely affect the performance and stability of a credit union?

a)

Management risk

b)

Concentration risk

c)

Credit risk

d)

Capital risk

5.

What risk refers to the potential for losses due to insufficient reserves to absorb unexpected losses or economic downturns.

a)

Credit risk

b)

Liquidy risk

c)

Market risk

d)

Capital risk

6.

Which term refers to the potential for borrowers to default on their loans, resulting in financial losses?

a)

Management risk

b)

Credit risk

c)

Capital risk

d)

Liquidity risk

7.

True or False: An income statement shows a company's financial performance over a period, while a balance sheet presents its financial position at a specific point in time.

a)

False

b)

True

8.

On which statement would you find the total balances on credit cards?

a)

Balance sheet

b)

Income statement

9.

On which statement would you find out how much money you made on your auto loan portfolio?

a)

Income statement

b)

Balance sheet

10.

What are other terms for networth? Select all the apply.

a)

Asset

b)

Equity

c)

Retained earnings

d)

Capital

11.

What are the 5 levers of a spread analysis? Select all that apply.

a)

Interest income

b)

Operating expenses

c)

Provision for loan loss

d)

Interest expense

e)

Other income/expense

12.

True or false: Ratios are useful beacuse they allow you to compare different CU's or your own CU over time regardless of size or growth.

a)

False

b)

True

13.

What are the 3 corners to financial triangle?

a)

Net worth

b)

Asset growth

c)

Key ratio

d)

ROA

14.

Networth goes up or down if grow assets?

a)

Stays the same

b)

Down

c)

Up

d)

It depends

15.

Networth goes up or down if we make money?

a)

I need more information

b)

Stays the same

c)

Up

d)

Down

16.

What does the acronym CAMELS stand for when referring to the Camel Rating system?

a)

Capital adequacy, Asset quality, Management capability, Earnings, Liquidity & Asset/Liability Management (ALM), Sensitivity to market risk.

b)

Creditworthiness, Asset valuation, Management effectiveness, Earnings performance, Liability structure, Systemic risk.

c)

Compliance, Audit quality, Management expertise, Efficiency, Loan portfolio quality, Sustainability.

d)

Customer satisfaction, Asset allocation, Market share, Earnings potential, Liability management, Strategic planning.

17.

Networth ÷ Assets =

(a)  

18.

Liabilities + Equity =

a)

Stuff

b)

Assets

c)

Networth

d)

Net income

19.

True or false: revenue - expenses = net income

a)

True

b)

False