Preview Questions Financial Analyst | Role Specific Skill

Question 1: How do you incorporate risk management techniques into your budgeting process?

Which action should you take?

Choose only one option

Increase revenue assumptions to offset potential risks

Decrease expense projections to create a buffer

Use forecast accuracy models to predict errors

Apply stress tests to financial assumptions

Question 2: When assessing credit risk for a bank's wholesale loan portfolio under IFRS 9, which modeling approach best captures forward-looking elements and borrower-specific scenarios while meeting the ?significant increase in credit risk? criteria?

Which action should you take?

Choose only one option

Multi-scenario weighted Monte Carlo simulation incorporating borrower-level PD transitions and macroeconomic forecasts

A Merton-type structural model using only historical default frequencies

Static migration matrices with fixed PD assumptions

Simple loss rate approach applying a uniform PD increase

Question 3: What method should be used to calculate the Weighted Average Cost of Capital (WACC) for a bank?

Which action should you take?

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Calculating WACC based only on equity costs without considering debt

Using a fixed rate for WACC over the life of the financial model

Using historical financing costs without adjusting for market conditions

Incorporating the cost of debt and equity, with weights based on market value of debt and equity

Question 4: Which economic theory is most applicable to long-term BFSI credit market trends?

Which action should you take?

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Classical economics

Keynesian economics

Monetarism

Supply-side economics

Question 5: How does regulatory compliance impact BFSI budgeting and forecasting?

Which action should you take?

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By creating variability in forecasting assumptions

All of the above

By imposing restrictions on capital allocation

By increasing operational costs

Question 6: In the context of financial reporting, what does "provision for loan losses" represent for a bank?

Which action should you take?

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The actual amount of loans that have defaulted

The expected loss from loans that may default

The reserves set aside for covering operational expenses

The total amount of loans issued by the bank