Preview Questions Credit Analyst | Role Specific Skill

Question 1: What are the key considerations when assessing "Covenant Compliance" in a loan agreement, and how do you evaluate a borrower's adherence to covenants?

Which action should you take?

Choose only one option

I assume covenant compliance is automatic and does not require monitoring

I assess the borrower's compliance with financial covenants, including debt-to-EBITDA and interest coverage ratios, to ensure they are within agreed limits

I only review covenants at the beginning of the loan term and ignore them thereafter

I disregard covenant compliance if the borrower has a high credit score

Question 2: A borrower with a high credit score applies for a loan but has a high debt-to-income ratio. What would a credit analyst recommend?

Which action should you take?

Choose only one option

The loan should be approved with a longer repayment period to lower the DTI ratio

The loan should be approved with a higher interest rate to mitigate risk

The loan should be approved without any modifications due to the high credit score

The loan should be denied due to high financial leverage despite a good credit score

Question 3: Why is peer comparison important in market research for credit analysis?

Which action should you take?

Choose only one option

Highlights industry benchmarks

Ensures accurate valuation

Identifies outliers in financial performance

Establishes market trends

Question 4: In financial reporting, what is the primary purpose of a financial covenant in a loan agreement?

Which action should you take?

Choose only one option

To protect the lender by ensuring the borrower maintains financial health

To adjust interest rates based on profitability

To provide a mechanism for the borrower to increase debt

To increase the value of the borrower's equity

Question 5: Which communication channel is most effective for first-stage debt collection?

Which action should you take?

Choose only one option

Social media messaging

Legal notices

Phone calls

Email

Question 6: How do you assess the "Impact of Recent Credit Behavior" when evaluating a borrower's creditworthiness, particularly if there have been recent changes?

Which action should you take?

Choose only one option

I assume recent changes are temporary and do not affect the borrower's creditworthiness

I adjust my risk assessment based on recent credit activity, such as changes in credit utilization, payment history, or inquiries

I focus only on the overall credit score and disregard recent changes

I ignore recent credit behavior and rely on historical data