December 2021. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question.
QUESTION ONE
1. Discuss three stages of analysis to a corporate credit proposition. (6 marks)
2. Explain the term qualitative credit analysis. (2 marks)
With reference to qualitative credit analysis discuss 6Cs method of credit assessment. (6 marks)
3. Summarise three qualities of a good loan security. (6 marks)
(Total: 20 marks)
QUESTION TWO
1. With reference to corporate credit explain the term financial covenants. (2 marks)
Suggest any four types of positive financial covenants. (4 marks)
2. Discuss six roles and responsibilities of banks board credit committee (6 marks)
3. Explain the term corporate financial risk assessment. (3 marks)
Discuss five benefits of corporate financial risk assessment. (5 marks)
(Total: 20 marks)
QUESTION THREE
1. Examine four features of a commercial paper (8 marks)
2. Evaluate six main causes of default and problem loans (6 marks)
3. Discuss three main factors that influence the country risk (6 marks)
(Total: 20 marks)
QUESTION FOUR
1. Discuss four main elements of a financial strategy. (8 marks)
2. Analyse four stages of business cycle. (8 marks)
3. Summarise four non-financial information used by credit analysts. (4 marks)
(Total: 20 marks)
QUESTION FIVE
1. Distinguish between personal and physical collateral. (2 marks)
Summarise three types of personal collateral. (3 marks)
2. Discuss five early warnings of corporate financial distress. (10 marks)
3. Describe five sources of working capital. (5 marks)
(Total: 20 marks)
