Preview Questions Credit Analyst | Role Specific Skill

Question 1: When analyzing a company's liquidity position, which of the following ratios is most important?

Which action should you take?

Choose only one option

Debt-to-Equity Ratio

Current Ratio

Return on Assets (ROA)

Gross Profit Margin

Question 2: In a loan structure, how does an amortizing schedule affect cash flow risk for the borrower?

Which action should you take?

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Decreases periodic payment risk

Increases payment predictability

Mitigates interest rate volatility

Reduces overall loan cost

Question 3: How do you calculate the "Credit Risk Premium" for a specific bond or loan, and what factors influence this calculation?

Which action should you take?

Choose only one option

I assume a fixed credit risk premium based on historical rates

I calculate the credit risk premium by assessing the risk-free rate, credit rating, and company-specific risk factors

I calculate the credit risk premium based solely on the borrower's credit score

I use industry averages to calculate the risk premium without considering specific factors

Question 4: What is the significance of Expected Credit Loss (ECL) under IFRS 9?

Which action should you take?

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Provides forward-looking credit loss assessment

Evaluates past credit performance

Aligns with Basel II guidelines

Simplifies credit risk reporting

Question 5: How does a company's debt-to-equity ratio affect its credit risk profile?

Which action should you take?

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A higher ratio has no effect on credit risk

A higher ratio suggests lower credit risk due to increased capital

A higher ratio indicates more leverage and potentially higher risk

A lower ratio always increases credit risk

Question 6: Which Basel regulation introduced the concept of Expected Credit Loss (ECL)?

Which action should you take?

Choose only one option

IFRS 9

Basel I

Basel II

Basel III