Assume That the Maximum Loss as a Percentage of Capital

question 25

Multiple Choice

Assume that the maximum loss as a percentage of capital is 12% of an FI's capital to a particular sector and that the amount lost per dollar of defaulted loans in this sector is 35%.What is the concentration limit (round to two decimals) ?

• A)12% * (1/0.35) = 34.29%
• B)35% * (1/0.12) = 4.2%
• C)12% / (1 + 0.35) = 8.89%
• D)35% / (1 + 0.12) = 31.25%

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Definitions:

Positioning

The strategy of creating a distinct image or identity for a product or brand in the customers' mind relative to competitors.

Distribution Strategy

The plan a company uses to ensure its products or services are delivered to the end-users efficiently, including channels, logistics, and market coverage.

Information Infrastructure

The foundational physical and digital facilities and components that provide the backbone for communication and information services.

Easy Access

The feature of being simple to approach, reach, enter, or use by consumers or users.