| Q.1 |
Please write the alphabate of selected choice
in the answer column: (25) |
i |
The credit conditions are usually most stringent in the ___________
phase of an economic cycle.
A) Recovery B)
Boom C) Recession
D) Depression
E) None of the above |
ii |
Which of the following is a type of credit risk?
A) liquidity risk B)
interest rate risk
C) settlement risk D)
operational risk E)
None of the above |
iii |
The real interest rate (lending rate) earned by a lender is equal
to nominal interest rate ___________ prevailing inflation rate.
A) plus B) minus
C) which is the same as D) Divide
E) None of the above |
iv |
When the government borrowing increases, the overall interest
rates in the economy increase thus leading to rise in cost of credit
for the private sector. This phenomenon is called _______________.
A) Crowding-in B) Crowding-out
C) Creeping-in D)
Creeping-out E) None
of the above
|
v |
The Annual Credit Plan of Pakistan envisages a credit growth
of ____________ during the financial year ending June 2007.
A) Rs 100 billion B) Rs 240
billion C) Rs 390 billion D)
Rs 500 billion E) None of the above |
vi |
According to the SBP the highest percentage growth in any sector
of Pakistan’s economy at 96.8% was observed in the ____________
sector during the financial year 2006. Therefore, financing for
capacity expansion is justified.
A) Fertilizer B) Cement C)
Commerce & Trade D) Personal loans E)
None of the above |
vii |
During the financial year 2006 the credit off-take to consumer
financing increased by around _________ as compared to much high
growth in the preceding year.
A) 24% B) 42%
C) 100% D)
200% E) None
of the above |
viii |
Presently, the maximum tenor of Karachi InterBank Offered Rate
(KIBOR) is _________.
A) 6 months B) 1 year C)
3 years D) 10 years
E) None of the above
|
ix |
One of the following is NOT a type of market risk:
A) interest rate risk
B) commodity price risk C)
foreign exchange risk
D) country risk
E) None of the above |
x |
Credit risk is the risk of ___________ loss from the failure
of a counterparty to fulfill its contractual obligations.
A) accounting B) economic
C) financial D)
Event E) None of the above
|
xi |
The process of parceling out the total risk to various asset
classes is called risk __________.
A) balancing B) rebalancing C)
budgeting D) None of the above
|
xii |
According to the Basel Accord each bank is required to maintain
capital at least __________ of its risk weighted assets.
A) 5% B)
8% C) 50%
D) 80%
E) None of the above |
xiii |
Credit spread is _____________ correlated with economic growth.
A) not at all B) positively
C) marginally D)
Negatively E) None of
the above |
xiv |
A loan becomes non-performing when it is overdue by _______ days(s).
A) 01 B)
07 C)
90 D)
365 E)
None of the above |
xv |
All of the following can be accomplished through the use of credit
derivative except:
A) Leveraging the credit risk
B) Reduction of credit concentration
risk
C) Investing in corporate loans
D) Preventing bankruptcy of a loan
counterparty
E) None of the above |
xvi |
Under the scenario of declining interest rates in an economy
the net interest income of a bank _____________ when it’s
rate-sensitive assets are more than rate-sensitive liabilities.
A) increases B)
decreases C)
remains same
D) can take any direction
E) None of the above |
xvii |
By the end of year 2006 (CY-06) the total number of loan accounts
was around _______ per 1,000 people in Pakistan.
A) 06 B) 30 C)
60 D) 300 E)
None of the above |
xviii |
The loans categorized under micro-financing have usually maximum
per-exposure limit of Rupees ________________.
A) 10,000.00 B) 100,000.00 C)
500,000.00 D) 1,000,000.00 E)
None of the above
|
xix |
The credit exposure includes current exposure as well as _______
exposure.
A) risk B) potential
C) risk-free
D) no other
E) None of
the above |
xx |
Portfolio _______________ occurs when the risk assets portfolio
is perfectly hedged against the value of liabilities.
A) immunization B)
multiplication
C) matching D) none
of the above |
xxi |
The credit rating of an obligor is ____________ related to his/her
probability of default.
A) exponentially B) directly
C) inversely D) not at all E)
None of the above |
xxii |
The liquidity position of the banking system is usually ________
when the interest rates are low.
A) low B)
high C)
not measurable D)
none of the above
|
xxiii |
The process to measure the changes in the value of a credit portfolio
for shocks of various degrees to different independent risk factors
is called ________________.
A) Risk rating B)
Back testing C)
Credit Value-at-Risk (CVaR)
D) Stress testing E)
None of the above |
xxiv |
The maximum debt-equity ratio allowed in case of seasonal financing
to borrowers, for a maximum period of six months, can be:
A) 40:60 B)
60:40 C) 80:20
D)
89:11
E) None of the above |
xxv |
Assuming all borrowers have same credit rating and belong to
the same economic sector, which loan among the following is most
risky?
A) Clean loan of Rs 0.5 million
B)
Rs 0.5 million with 40% recovery rate
C) Rs 1.0 million with 60% recovery
rate
D) Rs 1.0 million with 80% recovery rate
E) None of the above
|
| Q.2 |
State True or False in the answer column. Give
brief reason for your selection at the space provided below the question:
(10) |
i |
The expected credit loss that represents an
average credit loss must be measured and factored in credit pricing.
|
ii |
The recovery rates (of bad loans) tend to be
higher when the economy is in recession phase. |
iii |
A realizable security cannot be easily sold
to adjust for overdue loan. |
iv |
Under pledge, both the title and possession
of security rest with the borrower. |
v |
In case a borrower is not willing to repay
the loan it is an example of market risk. |
vi |
Credit default swap provides insurance coverage
to the counterparty and hence it acts as an effective hedging tool
for credit risk management. |
vii |
Duration of a loan portfolio is measured to
assess its credit risk. |
viii |
A Credit Analyst should recommend a loan when
its internal rate of return (IRR) is below the hurdle rate. |
ix |
When a bank approves credit limit to a borrower
and the borrower avails the loan partially yet the un-drawn loan
commitment is on-balance sheet activity of the bank. |
x |
The Forced Sale Value (FSV) is that amount
which would be recovered in all cases in case the borrower defaults.
|