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FINC 4330 EXAM 1 Nenninger with 100% correct answers
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FINC 4330 EXAM 1 Nenninger with 100% correct answers
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FINC 4330 EXAM 1 Nenninger with 100%correct answers
How is the US banking system different from the European system? - correct answer ✔✔-Europe has 6
to 9 banks per nation while the US has about 7000
-Over 90% are community banks.
Briefly explain the basic idea of how banks earn a profit. - correct answer ✔✔Primary income comes
from loans; banks by money at one price and sell it at a higher price.
What is meant by saying that loan growth is cyclical? - correct answer ✔✔it goes through cycles
What are some of the important items that a loan officer needs to understand about a potential or
current client's business? - correct answer ✔✔-how the business is managed -what the business'
products are -how the products/services are made or provided
-what the local and national economic prognosis is and how it will affect the business.
What are some of the personal characteristics that make up a good business banker? - correct answer
✔✔-Ability to communicate
-Ability to listen & observe**
-Have empathy
-Positive attitude
-Ethical
-Analytical ability & math aptitude
-Risk Taker**
-Common sense
-Motivation to sell
Explain the roles of owners (shareholders) - correct answer ✔✔Select the board of directors
, Explain the roles of the board of directors - correct answer ✔✔-Sets policies
- Reviews Overall operation of bank
-Selects CEO/Management team
Explain the roles of bank management. - correct answer ✔✔-Implements policies
-establishes procedures to implement policies
-day-to-day management of bank
What is the purpose of loan review? - correct answer ✔✔-To identify loans with problem potential
-Determine compliance with policies, laws, rules, and regulations
-evaluate overall quality of loan portfolio
-Assess adequacy of loan loss provision
-evaluate competence of bank's loan officers
What is a financial intermediary and how does it function as one? - correct answer ✔✔Accepts deposits
from savers and loans the deposits to borrowers through an indirect process such as a "bank" instead of
directly from the the source.
What is a credit file and how is it used? What types of information would you expect to find in a credit
file? - correct answer ✔✔includes information that is used to identify you such as your name, address,
Social Security Number, date of birth and employment information; reports information on accounts you
have established with them such as the type of account (bankcard, auto loan, mortgage, etc), the date
you opened the account, your credit limit or loan amount, the account balance and your payment
history; contains information about companies that have requested and/or viewed your credit report
information typically within the last two years; judgments, tax liens and bankruptcies may be reflected
on your credit file. Your credit file may also contain collection account information for debts that have
been turned over to an outside collection agency
What is generally included in a bank's loan policy? - correct answer ✔✔-methods to follow in loan
approvals
-lending authority of loan officers
-loans requiring board/committee approval
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