MONDAY: 4 December 2023. Morning Paper. Time Allowed: 3 hours.
This paper has seven (7) questions. Answer any FIVE questions. ALL questions carry equal marks. Do NOT write anything on this paper.
QUESTION ONE
1. Explain the following types of non-amortising loans:
Interest only loan. (2 marks)
Deferred-interest loan. (2 marks)
Balloon-payment loan. (2 marks)
2. Explain SIX benefits of undertaking credit risk assessment to an organisation. (6 marks)
3. Describe FOUR roles of credit management in the economic development of a country. (8 marks)
(Total: 20 marks)
QUESTION TWO
1.Describe the following terms as used in consumer credit:
Closed-end credit. (2 marks)
Open-end credit. (2 marks)
2. Explain FOUR factors that a credit analyst should consider when calculating a customer’s credit score. (8 marks)
3. Examine FOUR types of trade finance. (8 marks)
(Total: 20 marks)
QUESTION THREE
1. State FOUR ways in which a sales ledger could aid in debt collection. (4 marks)
2. In relation to management of accounts receivable, examine FOUR services rendered by a factor. (8 marks)
3. Explain FOUR documents used in export trade. (8 marks)
(Total: 20 marks)
QUESTION FOUR
1. Explain TWO costs of extending credit to customers. (4 marks)
2. Credit rating has been pivotal as an aid to credit risk assessment.
With reference to the above statement, assess FOUR limitations of credit rating. (8 marks)
3. Propose FOUR ways of enhancing the relationship between credit department and sales department.
(8 marks)
(Total: 20 marks)
QUESTION FIVE
1. Enumerate THREE actions a lender may take against a customer who shows signs of default. (6 marks)
2. Credit assessment does not necessarily stop once a customer is granted credit by a lender/creditor but mid-way the credit tenure, a re-assessment may be necessary.
In reference to this statement, summarise SIX customer behaviors that may necessitate their credit re-assessment. (6 marks)
3. Examine FOUR functions of credit rating agencies. (8 marks)
(Total: 20 marks)
QUESTION SIX
1. State SIX uses of bill of lading to the seller. (6 marks)
2. Outline SIX factors that a credit manager should consider when calculating premium for trade insurance cover. (6 marks)
3. Explain FOUR positive benefits of credit information sharing (CIS) to the economy. (8 marks)
(Total: 20 marks)
QUESTION SEVEN
1. Highlight FOUR factors a credit manager should consider when selecting a credit management system software. (4 marks)
2. Enumerate EIGHT objectives of a credit department. (8 marks)
3. Assess FOUR sections of a customer credit report. (8 marks)
(Total: 20 marks)
