Which business process is in place to ensure success and minimize problem loans is exemplified by systems to monitor accounts receivable and inventory, and control overhead and other expenses?

Select one:

a.product quality assurance

b.financial controls

c.supplier managment

d.monitoring the competitive landscape

Which situation is a non-financial early warning signal of a problem loan?

Select one:

a.changes in management, ownership, or key personnel

b.missed employee payroll

c.deteriorated liquidity or net working capital position

d.sent cancellation notice from an insurance company for nonpayment of a premium

Within the steps to resolving a problem loan, why is it important to reevaluate the borrower?

Select one:

a.evaluating the bank and borrower's strengths and weaknesses helps determine a course of action

b.some lenders grow too close to their customers and cannot objectively appraise the situation

c.until a borrower has been testedby adversity, it is difficult to measure a borrower's true character

d.a bank with a few bad credits and the likelihood for strong future earnings may decide to engage in protracted loan workouts

Before proceeding to liquidate the collateral, which step involves careful review of loan documents to ensure the bank has a valid security interest?

Select one:

a.gaining a borrower's cooperation

b.comparing the value and marketability of collateral against the borrower's indebtedness

c.confirming the bank's rights to collateral

d.analyzing the guarantor

Which chapter of the Bankruptcy Code directly relates to the adjustment of debts for an individual with regular income?

Select one:

a.Chapter 7

b.Chapter 12

c.Chapter 13

d.Chapter 15

Which item is directly impacted by a business banker's loan pricing decisions?

Select one:

a.interest expense recorded by the bank

b.interest income recorded by the bank

c.current assets recorded by the bank

d.current liabilities recorded by the bank

Which loan pricing consideration generally provides flexibility in setting the loan rate?

Select one:

a.the current market interest rates

b.the total customer-bank relationship

c.the pricing models used by banks

d.the customer's perspective on loan pricing

Which option identifies the concept that a dollar received today is worth more than a dollar received in the future?

Select one:

a.time value of money

b.inflation

c.depreciation

d.interest rate

When matching loan terms to the appropriate index, which index should be used for short-term loans and lines of credit that will mature in one year or less, generally at a variable rate?

Select one:

a.one-month, three-month, six-month, or one-year Treasury securities

b.two-year, three-year, four-year, and five-year Treasury securities

c.Federal Home Loan Bank (FHLB) advance rates

d.prime rate, adjusted as prime adjusts

What is the role of a prepayment penalty on a commercial loan?

Select one:

a.to compensate the bank for pledging to make a loan at terms specified during the loan approval process

b.to compensate the bank for having to reinvest the loan proceeds into a different interest rate environment

c.to compensate the bank for duties required during the loan, such as real estate inspection fees

d.to reimburse the bank for special collateral issues, such as a collateral storage fee