ABM UNIT – 29 Term Loans

Discussion 26.09.2018

1. A D G P is issued by the bank for ----------, by its client.

The choices are

(a) Sale of goods

(b) Purchase of goods

(c) Sale of capital goods

(d) Purchase of capital goods

The correct choice is (d) Purchase of capital goods

2. Which of the following statements is not true for an infrastructure project?

The choices are

(a) It has long gestation period

(b) It reduces the risk for the lender as his funds get assured deployment for a long time.

(c) The debt equity ratio is normally high for an infrastructure project

(d) The implementation period is usually long

The correct choice is (b) It reduces the risk for the lender as his funds get assured deployment for a long time.

3. Which of the following is not a source of funds for meeting the cost of fixed assets by an enterprise?

The choices are

(a) Credit by supplier of assets

(b) Internal accruals

(c) Debentures

(d) D P G

The correct choice is (d) DPG

4. Which of the following is ratio, indicative of the repaying capacity of a borrower?

The choices are

(a) Quick ratio

(b) T O L/T N W

(c) D S C R

(d) D E R

The correct choice is (c) D S C R

5. Which of the following is not correct regarding term loans by the banks?

The choices are

(a) Asset liability matching is an important consideration in term financing

(b) Installment of term loan, payable within one year is considered as current liability

(c) Repayment of a term loan can be in equated monthly instalments

(d) Current ratio is the most important ratio in appraisal of a term loan

The correct choice is (d) Current ratio is the most important ratio in appraisal of a term loan

6. Project loans can be given by the bank to

The choices are

(a) Only corporates

(b) Only corporates and partnership firms

(c) Only corporate, partnership firms and societies

(d) Any business entity

The correct choice is (d) Any business entity

7. Which of the following is not correct regarding infrastructure project by the banks?

The choices are

(a) Banks are allowed to funds promoters' equity in certain circumstances

(b) Exposure norms are relaxed by R B I

(c) Asset liability mismatch has been permitted by R B I

(d) I D F C provides liquidity support to banks

The correct choice is (c) Asset liability mismatch has been permitted by R B I

8. Which of the following statements is not correct for project appraisal?

The choices are

(a) Examination of technical feasibility is carried out

(b) The contribution of promoters forms a part of economic appraisal

(c) Promoters' background is part of the management appraisal

(d) Capacity of promoters to arrange for additional funds, in case of contingencies, forms a part of economic appraisal.

The correct choice is (d) Capacity of promoters to arrange for additional funds, in case of contingencies, forms a part of economic appraisal.

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9. Term loans are sanctioned to finance which type of assets?
Ans- land building vehicles

10. Which ratio is important for the purpose of sanctioning term loans?
Ans- Debt Service Coverage Ratio

11. Which of the following is a part of economic appraisal?
a. return on investment
b. internal rate of return method
c. pay back period method
d. break even analysis
Ans- d

12. Which of the following is not correct regarding term loans by the banks?
a. asset liability matching is an important consideration in term financing
b. Installment of term loan , payable within one year is considered as current liability
c. Repayment of a term loan can be in equated monthly instalments
d. current ratio is the most important ratio of a term loan
Ands- d

13. Select the incorrect sentense
1. Term loans are provided for acquiring the fixed assets.
2. Working capital term loans are provided for sustaining current assets.
3. Term loans are payable as per demand.
4. Working capital term loans are payable as per repayment schedule.

a. both 1 and 2
b. both 2 and 3
c. both 3 and 4
d. both 1 and 4
Ans- c

14. Which of the following is not correct regarding infrastructure project by the banks?
(a) Banks are allowed to funds promoters' equity in certain circumstances
(b) Exposure norms are relaxed by RBI
(c) Asset liability mismatch has been permitted by RBI
(d) MFG provides liquidity support to banks
Ans-c

15. infrastructure sector deals under which act n section?

Ans- Section 10 IT Actd

SELVARAJ T:
Wctl?

Meenakshi:
working capital term loan

SELVARAJ T:
Purpose of matching asset and liabilities,term loan consider as______?

Meenakshi:
deemed advance??

SELVARAJ T:
Bullet repayment?

Meenakshi:
entire payment in 1

instalment

SELVARAJ T:
Long term asset

Dpg?

Meenakshi:
deferred Payment gurantee

SELVARAJ T:
Dscr formula?

sonal:
PCE ?

Meenakshi:
sales/ratio

Roselin:
Partial credit enhancement

sonal:
Partial credit enhancement is fund base or non fund base?

Non fund base

DCCO?

Date of commencement of commencement of commercial operation

Sohini:
Wat is working capital term loan?

Meenakshi:
when bank provide term loan for current assets

sonal:
What is BEP?

Roselin:
Break even point

Neither profit nor loss

Sohini:
No profit no loss situation

sonal:
Break even point.a situation where neither profit nor loss.higher BEP is more risky

Sohini:
What r d 3 steps of project financing?

sonal:
Economic appraisal

Roselin:
Technical appraisal

Sohini:
Managerial appraisal

Correct me for any mistake... add more qus