According to the HKMA Loan classification system, loans overdue for more than 6 months where collection in full is less likely, and the bank expects to suffer a loss of principal and/or interest after taking account of the net realizable value of security is categorized as

Select one:

a. Loss

b. Doubtful

c. Substandard

d. Special mention

Which of the following are the common courses of action for banks to deal with mild financial distress defaults cases?

I. Changing repayment schedules

II. Encouraging firm to sell non-core assets

III. Demanding equity capital injection

IV. Debt restructuring

V. Liquidate the firm

Select one:

a. I and II only.

b. I, II and III only.

c. II, III and IV only.

d. II and V only.

The provisions made as a proportion of the entire loan portfolio of similar assets is known as _______.

Select one:

a. Loans classification

b. General Provisions

c. Specific Provisions

d. Bad Debts Write-offs

Higher provisions for loans may indicate

Select one:

a. More aggressive credit management

b. Lower risk

c. None of the other answers.

d. More conservative credit management

Which of the following scenario can be classified as severe financial distress problem loan case?

Select one:

a. Borrower faces short-term cash flow problems.

b. None of the other answers.

c. Cash flow problems coincide with borrowers asset values declining.

d. Characterized by missed payments and value of borrower less than loan amount.

Which of the following scenario can be classified as mild financial distress problem loan case?

Select one:

a. Characterized by missed payments and value of borrower less than loan amount.

b. Borrower faces short-term cash flow problems.

c. None of the other answers.

d. Cash flow problems coincide with borrowers asset values declining.