11. How does a high non-performing asset (NPA) ratio affect a bank?
a) It increases the bank’s profitability
b) It reduces the bank’s capital adequacy
c) It attracts more borrowers
d) It decreases the bank’s credit risk
12. Which of the following is a factor that contributes to lending risks?
a) Economic stability
b) Diversification of loan portfolio
c) Strict lending regulations
d) Government guarantee
13. How can a bank manage lending risks?
a) Diversifying its loan portfolio
b) Increasing the loan approval rate
c) Reducing collateral requirements
d) Ignoring borrower default history
14. What is interest rate risk in lending?
a) The risk of borrowers defaulting on loans
b) The risk of fluctuating interest rates affecting loan repayments
c) The risk of falling property prices
d) The risk of inaccurate credit scoring
15. Which of the following is an example of an external risk in lending?
a) Poor management decisions
b) Economic recession
c) Inaccurate credit scoring
d) Lack of borrower collateral
