Your manager has asked you to prepare an analysis for a borrowing request at Your Bank. Which of the following tasks are you most likely to complete first? a. Prepare a term sheet b. Create a projection c. Analyze the company's available collateral d. Evaluate the company's business strategy -Answer- D You are calling for the first time on the owner of a successful local business that currently banks with another bank in your market. You are very interested in developing a banking relationship with the business and its owner. Which of the following goals will be most important to achieve in the initial meeting? a. Obtain a commitment from the owner to open a checking account at your bank. b. Offer a term sheet outlining a loan at a competitive rate. c. Learn about the owner's business and personal objectives. d. Gather the most recent financial statements on the business. -Answer- C Gruper Home Appliances, Inc., a manufacturer of kitchen appliances, sells 70% of its goods to X-Mart, a large national retailer of consumer durables. Which of the following best describes the reason why Gruper has a low degree of bargaining power with XMart? a. There are no substitutes for the product b. The suppliers have high variable costs c. Customers have brand loyalty d. Sales are concentrated with a large volume buyer -Answer- D The NBER has released a report that suggests the economy is showing signs that it is moving into early contraction. You review your current portfolio to develop a list of customers that are likely to fare best through this cycle. Which of the following would be included on your list? a. A plumbing supplies distributor b. A local high fashion retailer c. A manufacturer of auto engines d. A local accounting firm -Answer- D You are preparing to meet with the owner of Style-For-Less, a successful retailer of apparel geared to young professionals. The owner has obtained and outfitted a second location in a high-traffic retail mall in preparation for its planned opening and has asked to meet with you to discuss a possible financing need. Based on the industry, you think the owner will most likely have a need for: a. A commercial mortgage to purchase the new location b. A lease to fund the acquisition of store fixtures c. A line of credit to purchase inventory for the upcoming season d. A term loan to purchase a point-of-sale system -Answer- C Parsons and Associates is a highly-regarded business financial advisory firm located in a downtown office building that was founded thirty-five years ago by Grant Parsons. Your bank has a long-term relationship with both the business and its founder. You recently saw Grant Parsons at a bank-sponsored economic outlook forum and he suggested you stop by his office to discuss some potential opportunity. Based on the type of company and life cycle stage, which of the following do you think is the most likely opportunity to be discussed? a. A mortgage to fund the purchase a new building. b. A line of credit to fund a seasonal buildup in receivables. c. A term loan to fund the buyout of his interest by his partners. d. A new loan to refinance his home mortgage. -Answer- C [The Conference Board announced today that interest rates remain low. Reports indicate that companies are holding lower inventories and capital expenditures have decreased. The availability of credit continues to be tight.] Based on the above report, which of the following best describes the current stage in the general business cycle? a. Early expansion b. Late expansion c. Early contraction d. Late contraction -Answer- D The economy is entering the late contraction stage of the business cycle. Your Bank has four customers requesting an increase to their lines of credit. Assuming their overall creditworthiness is comparable, which of the following customers would exhibit the least risk to the Bank? a. A wholesaler of floor coverings b. An upscale children's clothing boutique c. A beer and soda distributor d. A temporary staffing firm -Answer- C In which industry lifecycle stage would companies be most likely to focus on cost discipline? a. Introductory b. Growth c. Mature d. Decline -Answer- D In which company lifecycle stages is a company most likely to be profitable? a. Introductory and growth b. Growth and mature c. Mature and declining d. Introductory and declining -Answer- B In which company lifecycle stage is a company most likely to invest in equipment that adds efficiency? a. Introductory