IFRS 9

Under IFRS 9, impairment is based on: A) Incurred Loss Models B) Expected Credit Loss Models C) Historical Cost Models D) Cash Flow Models

Probability of Default (PD) measures: A) Recovery rates during default B) The likelihood of a default event occurring C) The present value of future cash flows D) The utilization rate of unutilized credit

What is the main characteristic of Stage 1 loans? A) Performing loans with no significant credit deterioration B) Loans on the Watch List C) Loans with severe financial standing issues D) Loans requiring collateral liquidation

What does IFRS 9 replace? A) IAS 18 B) IAS 39 C) IAS 36 D) IAS 38

What is the significance of Lifetime PD over 12-month PD? A) It accounts for short-term risk only. B) It includes both short-term and long-term risks. C) It excludes macroeconomic adjustments. D) It is used exclusively for Stage 1 loans.

Which type of exposure does ECL modeling apply to? A) Fixed assets B) Debt instruments at amortized cost C) Equity instruments at fair value D) Operating leases

What is the ORR range for low-credit-risk loans? A) 1–3 B) 1–5 C) 1–6 D) 7–10

How is ECL expensed in the bank’s financial statements? A) Deducted from liabilities B) Expensed in the income statement C) Recorded as a reserve in equity D) Capitalized as an asset

When down-staging a loan from Stage 1 to Stage 2, the ECL calculation switches to: A) 12-month PD B) PIT PD C) Lifetime ECL D) Recovery rate adjustment

Which stage of IFRS 9 classification applies to loans with severe credit deterioration? A) Stage 1 B) Stage 2 C) Stage 3 D) Stage 4

The formula for Expected Credit Loss (ECL) is: A) ECL = EAD × LGD B) ECL = PD × LGD × EAD C) ECL = EAD ÷ PD × LGD D) ECL = PD × EAD ÷ LGD

Which variable is adjusted for future economic expectations to calculate PIT PD? A) LGD B) TTC PD C) EAD D) Recovery Rate

What is the main determinant of the financial asset's classification under IFRS 9? A) Cash flow characteristics and business model B) Market trends C) Historical performance D) Risk appetite

In the ECL formula, which component reflects the amount outstanding at default? A) LGD B) PD C) EAD D) PIT PD

The regulator's role in IFRS 9 implementation includes approving: A) Recovery rates B) Models and assumptions C) Risk rating frameworks D) EAD projections

A loan is considered non-performing under Basel II if: A) Past dues ≥ 30 days B) Past dues ≥ 60 days C) Past dues ≥ 90 days D) Past dues ≥ 120 days

What does LGD stand for in the context of ECL? A) Loan Gross Default B) Loss Given Default C) Liability Gross Deficit D) Loss Guaranteed Debt