Financial Managment

Chapter 16

Lending Policies and Procedures: Managing Credit Risk

Fill in the Blank Questions

1. | The ______________ is a uniform rating system developed by regulators where banks are given a rating between one and five in each of the six categories and an overall rating. 

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2. | One of the 6 Cs of lending is ______________ which suggests that the lender must look at the position of the business firm in the industry and the outlook of the industry to evaluate a loan. 

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3. | One of the 6 Cs of lending is ______________ which suggests that a lender must ensure that the borrower is legally entitled to sign a binding loan agreement. For an individual this entails making sure the borrower is of a legal age to sign a contract. 

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4. | When a bank purchases a whole loan or a piece of a loan from another bank, they are purchasing what is known as a ___________________________. 

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5. | Loans that have minor weaknesses because a bank has not followed its written loan policy or which have missing documentation are called ______________ loans. 

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6. | ____________________________ loans are ones that are extended to farmers and ranchers to assist in planting crops, harvesting crops, and to support the feeding and care of livestock. 

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7. | ___________________________, usually large banks, devote a bulk of their credit portfolio to large-denomination loans directed towards corporations and other businesses. 

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8. | ____________________________ loans are ones that are secured by land, buildings, and other structures. These loans can be short term construction loans or longer term loans to finance the purchase of homes and...