#1
What is the primary goal of credit risk assessment?
Maximizing profits
Minimizing losses
Increasing market share
Expanding product lines
#2
What is a common qualitative factor considered in credit risk assessment?
Loan amount
Borrower's credit score
Market interest rates
Business reputation
#3
Which credit risk assessment method relies on the historical performance of loans to predict future defaults?
Credit scoring
Expert judgment
Behavioral scoring
SWOT analysis
#4
Which of the following is a quantitative method used in loan evaluation?
SWOT analysis
Credit scoring
Market research
Expert judgment
#5
What does the Debt-to-Income (DTI) ratio measure in credit risk assessment?
Borrower's assets
Borrower's income compared to debts
Loan interest rates
Market volatility
#6
What does the Credit Default Swap (CDS) market assess in credit risk?
Interest rates
Probability of default on loans
Borrower's assets
Market liquidity
#7
Which financial statement is commonly analyzed during credit risk assessment?
Income statement
Balance sheet
Cash flow statement
Statement of retained earnings
#8
Which regulatory body is often involved in overseeing credit risk management in financial institutions?
Federal Reserve (Fed)
Securities and Exchange Commission (SEC)
Environmental Protection Agency (EPA)
World Health Organization (WHO)
#9
What is the significance of the Loan-to-Value (LTV) ratio in mortgage lending?
Assessing the borrower's income
Evaluating the property's value compared to the loan amount
Calculating interest rates
Determining credit history
#10
What is the purpose of stress testing in credit risk management?
Assessing borrower's credit score
Evaluating the impact of adverse events on loan portfolios
Calculating interest rates
Determining loan eligibility
#11
In credit risk assessment, what does the term 'collateral' refer to?
Interest rate charged on loans
Assets pledged as security for a loan
Credit history of the borrower
Loan origination fees
#12
What is the role of a credit rating agency in credit risk evaluation?
Determining loan interest rates
Assessing the creditworthiness of borrowers
Handling debt collection
Providing collateral for loans
#13
Which risk mitigation strategy involves transferring credit risk to a third party?
Risk retention
Risk diversification
Risk transfer
Risk avoidance
#14
Which credit risk metric assesses the concentration of risk within a loan portfolio?
Loan-to-Income (LTI) ratio
Default probability
Portfolio concentration ratio
Collateral value
#15
What is the concept of 'covenant' in credit risk management?
Loan origination fees
A promise or agreement made by the borrower to the lender
Market volatility
Interest rate charged on loans