Preview Questions Credit Analyst | Role Specific Skill

Question 1: What is the primary purpose of the Statement of Cash Flows in the context of credit risk analysis?

Which action should you take?

Choose only one option

To detail the sources and uses of cash, highlighting liquidity and financial flexibility

To summarize the income and expenses for the period

To present the equity structure of the institution

To show the profitability of the institution

Question 2: In Credit Value at Risk (CVaR), what does the confidence interval typically represent?

Which action should you take?

Choose only one option

Loss threshold at a given confidence level

Maximum tolerable loss

Probability of expected loss

Average loss beyond a threshold

Question 3: If a borrower has a fluctuating income with some periods of low earnings, how would a credit analyst assess the loan application?

Which action should you take?

Choose only one option

The loan would be approved but with higher interest rates due to perceived risk

The analyst would assess the borrower's long-term earning potential, savings, and the reasons for fluctuations

The loan would be approved with no additional checks, as the income is high in other periods

The analyst would immediately reject the loan application due to income variability

Question 4: Which risk metric is most critical for assessing interbank exposures?

Which action should you take?

Choose only one option

Credit Risk

Liquidity Risk

Systemic Risk

Settlement Risk

Question 5: How do you interpret "Public Records" such as bankruptcies or liens in relation to a borrower's creditworthiness?

Which action should you take?

Choose only one option

Public records, especially bankruptcies, significantly decrease a borrower's credit score and increase risk, requiring further scrutiny

I consider public records irrelevant as long as the borrower is making timely payments

I assume that public records have no impact on creditworthiness if the borrower has a high score

I treat public records as a temporary setback and not a long-term issue

Question 6: Which metric is most reliable for evaluating a company's operational efficiency?

Which action should you take?

Choose only one option

Operating Margin

ROA

ROE

Asset Turnover Ratio