MODULE 2: CHAPTER 4 CREDIT MANAGEMENT

A management of the probability of the Loss that a company may suffer if any of its borrower defaults in their repayment is done by implementing various risk control strategies in the company to mitigate the same.

• Financial Management

• Risk based Pricing

• Credit Insurance

• Credit Risk Management

One of the five key credit department objectives is to monitor the operating costs of the credit department.

• True

• False

A systematic risk means risk associated with a particular industry or security.

• True

• False

It refers to the risk that a lender may not receive the owed principal and interest, which results in an interruption of cash flows and increased costs for collection.

• Credit Risk Assessment

• Credit Policy

• Credit Risk

• Credit Risk Management

When selling on credit, the initial sale may or may not increase.

• Reduced Cash Flow

• Keeping Up With Accounts Receivable

• Reduced Profit Margin

• Large Debts

A lender or company receives payments to an account that was previously considered bad debt.

• Bad Debt

• Bad Debt Recovery

It is the amount charged by the lender to the borrower as compensation for the use of the money during the loan period.

• Grace Period

• Annual Percentage Rate

• Interest Rate

Credit Policy Administration Guidelines is a credit policy administration responsible for the day-to-day supervision of the loan policy.

• True

• False

A report is meant for the public so that they come to know more about the financial health and operations of the company. It is also used for attracting interested and potential customers as well as investors.

• Independence

• Administration & Documentation Controls

• Audit of Transactions

• Use of External Report

Collection and processing of information and consideration and assessment of factors affecting a client's ability to pay loans as a basis for making appropriate lending decisions.

• Scattering Credit Risk

• Credit Analysis

• Mitigating Risk

• Credit Insurance