What is the main purpose of loan loss provisioning? Explain the concepts of incurred loss model and dynamic loan loss provisioning. What are the problems with the incurred loss model and how does the dynamic loan loss provisioning tries to address those problems?

Q: Why is it essential to know different kinds of loans?

A: A loan helps in determining the money supply and helps new businesses in the lending process. The…

Q: Which are the major problems facing a lender when reviewing a loan request made by a borrower?

A: Introduction: A loan agreement is nothing but an agreement between a lender and the borrower which…

Q: What is meant by a participation loan? What does the lender participate in? Why would a lender want…

A: Participation loans: It is a type of loan in which the lender shares the net operating income of the…

Q: What is the status of a lender on collateral if they fail to perfect their security interest? What…

A: A security interest in an asset that cannot be claimed by any other party is called a perfected…

Q: What is a syndicated loan? What are its advantages anddisadvantages?

A: Syndicated loan: It is moreover called as a syndicated bank facility, is loaning given by a bunch of…

Q: Determine the indifference price for a property that had an assumable below-market-rate loan?

A: Indifference price is the price at which the investor is indifferent to investing in any of the two…

Q: what is the best provisioning methodology in loan impairement and why?

A: Impairment refers to a reduction in an asset's value. It's similar to depreciation but it's applied…

Q: What is the difference between a credit sale (with a higher price as compared to the cash sale) and…

A: The amount of Sales made in credit has to be collected after certain period of time. In case of cash…

Q: What is the difference between a line of credit and a short-term loan?

A: Short term loan:   A loan is borrowed money that is to be paid back along with the interest. A…

Q: For a creditor; how is a loan impairment recorded?

A: Creditors:   They are the outside entities to whom the business owes money for any product or a…

Q: How can we determine a Loan's Balance, Principal, and Interest?

A: Loan balance can be determined with the help of formulae: PV is present value r is rate N is number…

Q: Which of the following type of loan is best used for temporary shortfalls of income? a. Secured…

A: Loans can be short term loans or long term loans

Q: Illustrate some examples in the area of loan transactions?

A: Loan transactions Accounting: Loans refer to one of the best options for financing. Every business…

Q: What contingencies are commonly found in permanent or take-out loan commitments? Why are they used?…

A: The contingencies found in permanent or take-out loan commitments and their use are as follows: A…

Q: How do lenders’ and borrowers’ requirements differ? How can financial intermediaries bridge the gap…

A: Lenders' requirements: The minimization of risk This includes the minimization of the risk of…

Q: Which of the following has the highest relative likelihood of being defaulted in paying the…

A: The interest expense and earnings before interest and income taxes details for each of the company…

Q: Discuss the steps of loan structuring.

A: Loan structuring is defined as the components, which used to make the loan, like term loan, rate of…

Q: How one determines where to borrow or not? What factor into the decision making process?

A: The act of borrowing money or the sum of money borrowed by an individual, company, government, or…

Q: loan portfolio audit

A: Loan Portfolio Audit-:A Loan Portfolio Audit furnishes an organized, in-depth investigation of…

Q: What does “assignment” mean and why would a lender want to assign a mortgage loan?

A: Mortgage assignments refer to a document that shows that a mortgage is transferred from the original…

Q: What is securitization? What are its advantages to borrowers?What are its advantages to lenders?

A: Securitization is a financial process that takes an asset of some kind and turns it into a security,…

Q: What are the main differences between ARMs and FRMs loans? You need to highlight the differences in…

A: Loan which are provides to the borrower either in Adjusted Rate of Mortgage or Fixed Rate of…

Q: Collateral is a valuable asset that is pledged to ensure loan payments. If you fail to repay the…

A: In mortgage loans, collateral is an asset or security used to take loan.

Q: Explain Issuance of loans to unworthy entities with examples

A: Issuance of loan to unworthy entities means granting of loans to the entities having a poor…

Q: What is a buydown loan? What parties are usually involved in this kind of loan?

A: INTRODUCTION There are various mortgage financing techniques which helps to reduce cost for the…

Q: Describe some of the motives and mistakes made by the mortgageoriginators?

A: The mortgage broker did not fix a target. Without a clear aim for the year, couriers can transfer…

Q: What are the factors that you need to consider in applying for a loan? Why is it important to…

A: When applying for a loan one need to consider several factors at play. Some of them are quantitative…

Q: Why would a lender be willing to make a participation loan?

A: Introduction: Participation loan is a form of loan in which lender is participating in net operating…

Q: How does compound interest affect the loans you undertake? For example, how would this  affect…

A: Interest is an additional value which is charged on borrowed or deposited amount. Interest can be an…

Q: why loan officer prefer accrual basis accounting

A: The financial statement of a firm can be prepared based on accrual basis of accounting or cash basis…

Q: What is interest earned by a lender but not yet collected? As well as what is interest earned by a…

A: Lender is the person who lends or provides money to other person in return of some interest as well…

Q: What are spontaneous sources of short-term financing and unsecured sources of short-term loans

A: The source of funds which are having a zero cost is termed as a spontaneous source of funds. It is…

Q: Describe the concept of non interest bearing on loan.

A: A non-interest bearing loan is a debt for which there is no documented requirement for the borrower…

Q: What are the stages and processes for resolving bad loans? note: include a reference

A: Bad Loans: When a loan made by a bank cannot be recovered, either partially or fully, it is termed a…

Q: What are the pros and cons of loaning?

A: Loaning is a process of lending money. An interest rate is charged by the lenders on the money lent…

Q: Explain Negative Amortization Loans with example?

A: Amortization is a way to spread regular payment over time. There is a fixed rate which is paid as…

Q: How does getting a secured loan using accounts receivableas collateral differ from factoring?

A: In factoring, the corporation sells their receivable balance to the factoring corporation at a…

Q: What is the meaning of Loan assumably?

A: Introduction: Assumable loan is nothing but a mortgage which can be passed to another party by the…

Q: Should liability for rent deposit be amortized? Why or why not?

A: The assets are amortized as they provide benefits for the long period.

Q: in the 5 c's of stracturing a loan approval, what fundamental piece do you think it ignore or fall…

A: Long-term loan:   It's a debt instrument that a company uses to raise money. The collateral is…

Calculating the Return On A Loan