Which factor tends to help or improve a bank's negotiating leverage?
a. involvement of
multiple financial service providers
b. customer with a strong financial position
c. a mature business with managers experienced in borrowing
d. better locations and superior products
At which point in the negotiation process should the business banker be fully aware of the customer's objectives and position?
a. setting an agenda
b. opening the negotiation
c. presenting the proposal, listening to counterproposal
d. reaching an agreement
In an attempt to lower the loan pricing, a customer falsely states that another bank has made a better offer. This is an example of which negotiating tactic?
b. bad-faith negotiation
d. escalating demands
Which cost of problem loans can be described as "unproductive time spent monitoring problem loans"?
a. increased administrative expense
b. lowered employee morale
c. damaged reputation
d. increased regulatory expense
Which option would be correctly classified as a third-party early-warning signal of a problem loan?
a. deterioration in borrower's cash position
b. significant changes in balance sheet structure
c. change in supplier's credit terms
d. loss of any major customers
Which cost can result from an excessive number of problem loans that damage a bank's reputation?
a. regulatory examination time and expenses increase
b. legal expenses increase
c. capital raising effort and expenses increase
d. administrative and overhead costs increase
Which situation is a bank cause of problem loans?
a. loan origination to industries that are not understood
b. inadequate analysis of guarantors
c. improper loan structuring, support, and documentation
d. poor product or service
Which adverse external development is exemplified by a firm's inability to cope with natural disasters, such as fires, droughts, floods, and hurricanes?
a. competitive factors
b. economic factors
c. technological factors
d. environmental factors
Which financial early-warning signal directly involves the borrower's income statement?
a. deteriorating cash position
b. adverse economic conditions
c. poor management of plant and equipment
d. major gap between gross and net sales
Which lender action that can lead to the early detection of a problem loan is exemplified by obtaining and reviewing financial information, calling on the business in person or by telephone, and regularly assessing the credit risk of a borrower after a loan is closed?
a. initial financial analysis
b. loan structuring, support, and documentation
c. ongoing loan monitoring
d. analysis of guarantors