Assume That an FI's Concentration Limit on a Particular Sector

question 38

Multiple Choice

Assume that an FI's concentration limit on a particular sector is 15 per cent and that the sector's loss rate is 25 per cent. What is the maximum loss as a percentage of the FI's capital (round to two decimals) ?

• A) 1.67 per cent
• B) 0.60 per cent
• C) 10.00 per cent
• D) 3.75 per cent

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Rent Revenue

Income earned from leasing out property or space.

Liability-revenue Relationship

A financial concept that examines the connection between a company's incurred liabilities and the revenue generated over a certain period.

Deferred Revenue

Revenue recorded by a corporation for products or services that have not yet been provided or executed, classified as an obligation.