NAMIBIAN INSTITUTE OF BANKERS 2018 ASSIGNMENT 1

Transcription

1 NAMIBIAN INSTITUTE OF BANKERS 2018 ASSIGNMENT 1 COURSE: MODULE: DIPLOMA IN BANKING, FINANCE AND CREDIT CREDIT RISK MANANGEMENT II MODULE CODE: ADCRM 3000 TOTAL MARKS: 100 EXAMINER: MR. ALBERT KAMUINJO MODERATOR: MRS. TWAHAFIFWA HEITHA Instructions: 1. Answer all questions 2. Start every question on a new page 3. The IOB examination and assessment rules apply 0

2 Dear Student INTRODUCTORY NOTES I.O.B welcomes you to the new academic year 2018 wishing you a successful year and all the best in your studies. Course Name: CREDIT RISK MANAGEMENT II Course Code: ADCRM 3000 Module Description: The detailed contents are as follows: Duties and responsibilities of a credit manager; basic credit terms; basic debt terms; duties of credit and debt specialists; debt collection instruments; debt collection process and repossession; default judgment and foreclosure; and credit risk management and procedural guidelines. Course Delivery Methods Vacation Schools During this first semester, a vacation school will be offered at I.O.B venues. The vacation school dates will be advised on time. Attending vacation schools is compulsory and students are strongly advised to make use of this support service. It is a valuable opportunity to make personal contact with tutors and fellow students, and to discuss problems. Assessment Two assignments have been set for you. These two assignments contribute equally to your course marks. Assessment of each module shall be based on Continuous Assessment (CA) and Formal Assessment (FA) methods. CA will consist of two pieces of assessment during a semester. FA will be through a three-hour examination per module at the end of each semester. Final mark is made up of CA (40%) and FA (60%). Minimum of 40% in CA is required to qualify for examination. 1

3 Submission of assignments The assignments should be submitted within the time line given by I.O.B and should not be handed in after the due dates. These assignments should be properly answered with maximum effort being put so that they may give you the best course mark. All sources should be referenced according to the in house style. It is very important to complete and submit a clean, clear and well-argued assignment for marking. Make sure that you have answered the questions. Every page of the completed assignment must be numbered in the correct order before the pages are stapled together inside the assignment cover. Once completed, each assignment must be stapled in a separate assignment cover. Plagiarism Intellectual dishonesty is theft and considered to be a criminal act. This is committed when a student copy or steal another s work without permission or acknowledgment of the source. Also, when students knowingly share work with others to be submitted as their own. Both students, sharing and submitting are guilty of plagiarism. Students sign an undertaking that they will refrain from plagiarism. Any act of plagiarism is subject to disciplinary measures as outlined in the Plagiarism policy of the IoB. Tutor s contacts: Name: Mr. A. Kamuinjo Cellphone no: address: akamuinjo@gmail.com 2

4 ASSIGNMENT 1 [100 Points] Question 1 (20 marks) Choose the correct sentence or word in each of the following instances. Merely write down the number of the question and next to it the answer that you choose to be correct. Each carries two (2) marks. E.g. 1.1 b 1.1. Which of the following describe the duties of credit analyst in a bank? a. Processing loan b. Loan approval c. Determining the credit limit d. Risk monitoring 1.2 A term that describes a loan that is not generates principal and interest rate to a bank. a. Bad debt b. Default c. Problem loan d. Zombie debt 1.3 An accounting strategy used by financial institutions in removing bad debt from their books. a. Bad debt recovery b. Removing debt c. Cash loan d. Write-off 1.4 Choose type of bad debt expenses a company incurs while attempts to collect outstanding payment. a. Computer and resources b. Time and resources spending past due notices c. Bad debt expenses d. Fuel and time 3

5 1.5 A term that describes a financial institution that lent money to a debtor without include collateral in the agreement. a. Unsecured debt b. Unsecured creditor c. Bad debt d. Commercial bank 1.6 A ratio used to measure or indicate of a company financial leverage. a. Debt/asset ratio b. Debt/equity ratio c. LCR ratio d. Profitability ratio 1.7 A term that describes the amount of money which a borrower can carry without compromising financial stability. a. Debt limit b. Debt capacity c. Bad debt d. Overdraft 1.8 A term describes consolidating all non-secured debts, such as credit cards and tuition bills and so on. a. Consolidation debt b. Debt obligation c. Debt reduction d. Restructuring 1.9 A financial transaction in which one person or entity swaps debt with another known as a. Debt/equity swap b. Debt swap c. Foreign exchange d. MoneyGram 4

6 1.10 A process in which concessions are made on a debt by a lender which recognizes that the borrower is in financial difficulties are known as. a. Trouble asset relief program b. Debt relief c. Trouble debt restructuring d. Debt restructuring Question 2 (5 marks) (a) Using your own words, explain what does a loan administrator do? Question 3 (25 marks) (a) In a banking system, there is uncertainty associated with borrower loan repayments, the current perception again from Allen and Santomero (1998) is that banks are now more fully located in credit risk management. Do you agree or disagree? Motivate your answer. Question 4 (25 marks) (a) Sinkey (1998) suggested that measurement and management are two methods of minimizing credit risk within banking operations. Explain and discuss benefits of credit risk management to key stakeholders within financial sector. Question 5 (25 marks) (a) What is meant by foreclosure? Explain the strategies people may use to prevent losing their properties through the foreclosure process. 5

7 6