Credit Analysis Practice Exam
Credit analysis is the process of evaluating a borrower's creditworthiness and ability to repay a loan or debt. It involves assessing various factors such as the borrower's financial history, credit score, income, and existing debt obligations to determine the risk associated with lending money to that individual or entity.
Why is Credit Analysis important?
- Risk Management: Credit analysis helps financial institutions assess the risk of default on loans, allowing them to make informed lending decisions.
- Investment Decisions: Investors use credit analysis to assess the creditworthiness of companies before investing in their bonds or securities.
- Financial Health: Credit analysis provides insights into an individual's or company's financial health, helping them manage their finances more effectively.
- Regulatory Compliance: Financial institutions use credit analysis to comply with regulatory requirements related to lending practices.
Who should take the Credit Analysis Exam?
- Credit Analysts
- Loan Officers
- Financial Analysts
- Risk Managers
- Investment Analysts
Skills Evaluated
Candidates taking the certification exam on the Credit Analysis is evaluated for the following skills:
- Financial Statement Analysis
- Risk Assessment and Management
- Credit Scoring and Modeling
- Industry and Market Analysis
- Communication and Presentation Skills
Credit Analysis Certification Course Outline
Module 1. Introduction to Credit Analysis
- Definition and Importance of Credit Analysis
- Role of Credit Analysis in Financial Institutions
- Legal and Regulatory Environment for Credit Analysis
Module 2. Financial Statement Analysis
- Understanding Financial Statements (Balance Sheet, Income Statement, Cash Flow Statement)
- Ratio Analysis (Liquidity Ratios, Solvency Ratios, Profitability Ratios)
- Trend Analysis and Common Size Analysis
Module 3. Credit Risk Assessment
- Types of Credit Risk (Default Risk, Credit Spread Risk, Concentration Risk)
- Credit Scoring Models (Application Scoring, Behavioral Scoring, Collection Scoring)
- Credit Rating Agencies and Credit Ratings
Module 4. Loan Structuring and Pricing
- Loan Structuring (Loan Types, Collateral, Terms)
- Loan Pricing Models (Risk-Adjusted Return, Cost of Capital)
- Credit Enhancement Techniques (Guarantees, Collateral, Insurance)
Module 5. Industry and Market Analysis
- Industry Analysis Frameworks (Porter's Five Forces, SWOT Analysis)
- Market Analysis (Market Trends, Competitive Landscape)
- Impact of Industry and Market Factors on Credit Risk
Module 6. Credit Policy and Procedures
- Developing Credit Policies (Underwriting Standards, Credit Approval Process)
- Credit Monitoring and Review Procedures
- Compliance with Regulatory Requirements
Module 7. Credit Portfolio Management
- Portfolio Diversification and Risk Management
- Asset-Liability Management (ALM) in Credit Portfolios
- Performance Measurement and Reporting
Module 8. Special Topics in Credit Analysis
- Sovereign Risk Analysis
- Project Finance Analysis
- Structured Finance Analysis