Risk Management CH 3 Credit Risk Individual Loan Flashcards Quizlet PDF

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Download Risk Management CH 3 Credit Risk Individual Loan Flashcards Quizlet PDF

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07/09/2020

Risk Management | CH 3 Credit Risk:Individual Loan Flashcards | Quizlet

Risk Management | CH 3 Credit Risk:Individual L Leave the first rating

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Finance

Key concepts: Credit Risk Analysis

Adjustable Rate Mortgages

Debt Equity Ratio

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Terms in this set (103) 1. Default by a large

FALSE

corporation is seldom a problem for FIs since these corporations have many different sources of borrowed funds.

2. Junk bonds are bonds

TRUE

that are rated less than

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07/09/2020

Risk Management | CH 3 Credit Risk:Individual Loan Flashcards | Quizlet

investment grade by bond-rating agencies.

3. During the decade of

TRUE

the 1990s the asset quality of U.S. banks continued to improve.

4. Sustained credit

TRUE

quality problems can drain an FI's capital and net worth.

5. Credit risk applies only

FALSE

to bond investment and loan portfolios of depository institutions and other FIs.

6. The primary difficulty

FALSE

in arranging a syndicated loan is having all of the various lending and borrowing parties reach agreement on terms, rates, and collateral.

7. A secured loan has

TRUE

claim specific assets of the borrower in the case of default.

8. Unsecured debt is

FALSE

considered to be senior to secured debt.

9. The amount of security

TRUE

or collateral on a loan and the interest rate or risk premium on a loan normally are negatively related.

amount of time during

TRUE

which the loan can be initiated. 10. A loan commitment is an agreement involving the amount of loan available and the

11. The exact interest rate

TRUE

to be charged on a fixed-rate loan is agreed https://quizlet.com/444300829/risk-management-ch-3-credit-riskindividual-loan-flash-cards/

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07/09/2020

Risk Management | CH 3 Credit Risk:Individual Loan Flashcards | Quizlet

upon by all parties at the time the commitment is negotiated.

12. Long-term loans are

FALSE

more likely to be made under a loan commitment agreement than short-term loans.

13. Commercial paper

TRUE

has become an acceptable substitute source for bank loans for many large corporations.

14. Commercial paper

FALSE

typically is secured by specific assets of the borrower.

15. Commercial loans

TRUE

have been decreasing in importance in bank loan portfolios.

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