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

question 22

Multiple Choice

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

• A)1.67%
• B)0.60%
• C)10.00%
• D)3.75%

---

Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after all liabilities have been deducted, often referred to as shareholder's equity or owners' equity.

Accounts Receivable

Unpaid amounts by customers for products or services they have obtained from a company.

Customer Payments

Funds received from customers as payment for goods or services provided.

Credit Sales

Sales made by a business where payment is deferred to a later date, typically documented by an invoice.