Loans And Discounts Quiz

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| By Alston Christopher

Alston Christopher

Community Contributor

Quizzes Created: 2 | Total Attempts: 188

Questions: 15 | Attempts: 89 | Updated: Mar 14, 2023

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Questions and Answers

1.

Advances in which interest is collected in advance.
2.

Advances in which interest is collected upon maturity.

Explanation
In this context, the term "advances" refers to loans. The phrase "in which interest is collected upon maturity" indicates that the interest on these loans is accumulated and paid at the end of the loan term. Therefore, the correct answer is "loans, loan."

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3.

Period of time over one year but not exceeding 5 years.

Explanation
The term "intermediate" refers to something that is in between or in the middle. In the context of the question, it suggests a period of time that is not too short or too long. "Intermediate term" further emphasizes this idea, indicating a specific duration that falls within a range. Therefore, the correct answer "intermediate, intermediate term" implies a time period that is longer than one year but does not exceed five years.

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4.

Method of payment in which the loan is used to generate proceeds that are in turn used to repay the loan.

Explanation
A self-liquidating loan is a method of payment where the borrower uses the loan to generate funds, which are then used to repay the loan. This type of loan is typically used for business purposes, where the funds generated from the loan are used to finance a project or investment that will generate enough revenue to repay the loan over time. The term "self-liquidating" refers to the fact that the loan is paid off through the cash flows generated by the project or investment, rather than relying on other sources of income.

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5.

Term for one-time payment for the value of an asset.

Explanation
A lump sum refers to a one-time payment made in full for the value of an asset. This means that instead of paying in installments or over a period of time, the entire amount is paid at once. The terms "lump sum" and "lump-sum" are used interchangeably to describe this type of payment.

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6.

Withdrawal of money in excess of the account's credit balance

Explanation
An overdraft refers to the situation where a person withdraws more money from their bank account than what is available in their credit balance. It allows the account holder to have a negative balance, essentially borrowing money from the bank. An overdraft line is a pre-approved limit of how much money a person can withdraw beyond their credit balance. Both terms are commonly used in banking to describe this type of transaction.

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7.

Pools of loans banks own and manage.

Explanation
A loan portfolio refers to the pools of loans that banks own and manage. It represents the total amount of loans held by a bank and includes various types of loans such as mortgages, personal loans, and business loans. Managing a loan portfolio involves assessing the creditworthiness of borrowers, monitoring loan repayments, and mitigating risks associated with default or non-payment. By analyzing the loan portfolio, banks can evaluate the overall health of their lending activities, make informed decisions regarding loan approvals, and implement strategies to optimize their loan portfolio performance.

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8.

Also called as loans and discounts department

Explanation
The term "credit department" refers to the department within a company or financial institution that is responsible for evaluating and approving credit applications, managing credit risk, and setting credit limits for customers. This department is also involved in monitoring and collecting outstanding debts. The credit department plays a crucial role in assessing the creditworthiness of individuals or businesses and ensuring that credit is extended responsibly. It is often referred to as the "loans and discounts department" because it deals with the granting of loans and the calculation of discounts on credit.

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9.

Appraisal of a prospective borrower's ability and willingness to repay a loan

Explanation
The answer refers to various terms and abbreviations related to the appraisal of a prospective borrower's ability and willingness to repay a loan. CI stands for credit investigation, C.I.R. stands for credit investigation report, and CI also represents credit investigation. These terms are commonly used in the financial industry to assess the creditworthiness of individuals or businesses applying for loans.

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10.

A term referring to records keeping/management

Explanation
The term "file" refers to a collection of records or documents that are stored and organized for easy retrieval and reference. It can also refer to the act of organizing and storing these records, which is known as "filing". Filing involves categorizing and arranging documents in a systematic manner, typically using folders, cabinets, or digital systems. This ensures that information can be easily accessed when needed and promotes efficient record management.

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11.

A term that pertains to a systematic examination and evaluation of data or information

Explanation
Analysis is the correct answer because it refers to the process of systematically examining and evaluating data or information. It involves breaking down complex information into smaller components, identifying patterns, relationships, and trends, and drawing conclusions or making interpretations based on the findings. Analysis is a crucial step in various fields such as science, business, research, and decision-making, as it helps to gain a deeper understanding of the data and derive meaningful insights.

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12.

Loans protected by an asset or collateral of some sort

Explanation
A secured loan refers to a type of loan where the borrower pledges an asset or collateral to the lender as a form of security. This collateral acts as a guarantee for the lender that they can recover their funds if the borrower fails to repay the loan. By having this collateral, the lender has a higher level of assurance and is more willing to offer a lower interest rate and better terms to the borrower. Therefore, secured loans are loans that are protected by an asset or collateral of some sort.

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13.

Sum of money due as one of several equal payments

Explanation
An installment refers to a sum of money that is due as one of several equal payments. It is commonly associated with installment credit and installment loans, where a borrower repays a loan in fixed monthly installments over a specified period of time. This payment structure allows individuals to manage their expenses more easily by spreading out the cost of a large purchase or debt over time.

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14.

Amount of credit extended to a borrower.

Explanation
The term "credit line" or "line of credit" refers to the maximum amount of credit that a lender is willing to extend to a borrower. It represents the maximum limit that the borrower can borrow from the lender. This credit line can be used by the borrower as needed, and interest is typically charged only on the amount borrowed. It provides flexibility to the borrower to access funds when required, up to the specified credit limit.

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15.

When character is the most important consideration in granting the loan, the applicant is known as a ____________ risk.

Explanation
When character is the most important consideration in granting a loan, the applicant is known as a moral risk. This means that the lender is primarily concerned with the applicant's integrity, honesty, and ethical behavior. A moral risk is someone who may have a good credit score but has a history of not paying debts or engaging in fraudulent activities. Therefore, the lender must carefully assess the applicant's character before approving the loan.

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