If a Bank's Concentration Limit (As a Percentage of Capital)

question 14

Multiple Choice

If a bank's concentration limit (as a percentage of capital) is 25.0 percent, and it does not permit a loss of any loan to impact more than 10 percent of its capital, what is the expected recovery on loans that are defaulted?

• A)20 percent.
• B)30 percent.
• C)40 percent.
• D)50 percent.
• E)60 percent.

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Definitions:

Modeling

The process of observing and imitating a specific behavior from others, often a mechanism of learning in social contexts.

Role-Playing

A method used in psychology and education where individuals assume roles and act them out in a controlled setting to explore behaviors, thoughts, and emotions.

Cognitive Therapy

A form of psychotherapy that focuses on changing unhelpful or unhealthy thought patterns.

Rational Response

A thought or action that is based on reason and logic, often as a counter to emotional or irrational reactions.