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RMA EXAM QUESTIONS AND ANSWERS
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RMA EXAM QUESTIONS AND ANSWERS
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RMA EXAM QUESTIONS AND ANSWERSSTEPS IN THE LENDING DECISION PROCESS - Answers -CUSTOMER:
• Who is the borrower?
• Does the company have multiple entities?
AMOUNT REQUESTED:
• Does the request make sense?
• Is the request tied to a specific business strategy?
• Is the amount consistent and sufficient for the purpose?
TERMS PROPOSED:
How should the debt be structured to reduce risk?
PURPOSE:
How and when will the money be used?
• Is the purpose consistent with the business strategy and credit union policy?
• Does the purpose make sense?
REASON:
What has caused the request?
• Does the story make sense?
• Do you want to lend to a company that needs money for this reason?
SOURCE OF REPAYMENT:
• How and when will the cash be generated to repay the debt?
• Are there multiple sources of repayment?
THE RELATIONSHIP BUILDING PROCESS - Answers -Step 1: What are the
company's strategic and competitive challenges?
Step 2: What are the owner's objectives?
Step 3: What financial services or products can the bank provide to meet the owner's
business and personal
objectives?
THE FIVE FORCES - Answers -1. Bargaining power of customers
2. Bargaining power of suppliers
3. Threat of new entrants
4. Threat of substitute products
5. Intensity of competitive rivalry
In addition to Porter's five forces, subsequent strategists have suggested that there is a
sixth force. That force would
include non-competitors who nonetheless exert considerable influence over the degree
of difficulty of succeeding
, in an industry. Called stakeholders, these influencers might include governments,
creditors, employees, and
shareholders. - Answers -
Bargaining Power of Customers - Answers -Customers are powerful when they can
impose pressure on the sellers' margins.
There are few but large-volume buyers. - Answers -
Products are undifferentiated in the market. - Answers -
Sellers have high fixed costs. - Answers -
Customers could produce the product
themselves. - Answers -
The product is not of strategic importance
to customers. - Answers -
Bargaining Power of Suppliers - Answers -Suppliers are powerful when they can
exercise significant control over the price or
availability of products their customers need.
Market dominated by a few very
large suppliers - Answers -
Suppliers' customers are neither large
nor concentrated - Answers -
There are no substitutes for the
product - Answers -
It is expensive to switch from one
supplier to another - Answers -
Suppliers can integrate forward/do
the borrower's business - Answers -
WHAT DO WE MEAN BY "MACROECONOMIC INFLUENCES?"
• The effects of the general business cycle on a company's ability to do business.
• Secondary effects of the business (or economic) cycle, including interest rates,
consumer and business demand
for goods and service, housing starts, and rate of unemployment. - Answers -
The official peaks and troughs of the U.S. cycle are determined by the National Bureau
of Economic Research
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