16. What does asset liability management (ALM) involve in lending?
a) Managing the bank’s non-performing assets
b) Analyzing the bank’s capital adequacy
c) Matching the bank’s assets and liabilities to reduce interest rate risk
d) Identifying borrowers with high credit risk
17. How can a bank minimize credit risk in lending?
a) Increasing the loan amount
b) Reducing collateral requirements
c) Implementing accurate credit scoring models
d) Expanding the loan term
18. What is loan loss provisioning?
a) Setting aside funds to cover potential losses from non-performing assets
b) Reducing the interest rate on loans
c) Extending the loan term
d) Selling non-performing assets
19. Which of the following is a common indicator of credit risk?
a) Debt-to-equity ratio
b) Profit margin
c) Earnings per share
d) Current ratio
20. How can a lender evaluate a borrower’s creditworthiness?
a) Analyzing the borrower’s credit score and credit history
b) Assessing the borrower’s appearance and body language
c) Checking the borrower’s social media profiles
d) Asking for personal references
