studentid#_classnumber_name _Spring2021

THE INTERNATIONAL UNIVERSITY (IU) – VIETNAM NATIONAL UNIVERSITY – HCMC

THE FINAL EXAMINATION_COMMERCIAL BANKING

Date:
Duration: 60 minutes
Name: .................................. Student
ID: .............................................

SUBJECT: COMMERCIAL BANKING

Dean of School of Business Lecturer
Signature: Signature:

Full name: Vu Thuy Mai Uyen, MSc.

Full name: Dr. Trinh Viet Dung

GENERAL INSTRUCTION(S)
1. This is open book examination
2. This exam will NOT be conducted through Blackboard; you must prepare your exam
using Microsoft Word processing software on a computer
3. Name your file as shown: studentid#_classnumber_name _Spring2021
4. Please also type studentid#_classnumber_name _Spring2021 into the header of
your document. The file will be separated from the blackboard submission file when
given to the professor; therefore, the exam must be identifiable to the professor by
your student id#.
5. It is recommended that before beginning to write that you name and save the
document and also activate any automatic save function that your word processing
software may have
6. You are also advised to create a copy of the document on another storage medium,
either by putting your document in a folder that synchronizes to a service such as
Dropbox or Box, or by occasionally copying the document onto a flash drive or
network drive.
7. Your work will be checked for plagiarism, so just don't do it. Failure to uphold the
standards of academic honesty will result in a failing grade for the course and,
potentially, other serious disciplinary action up to and including expulsion.
8. Make sure to keep the saved file until final grades have been released.

THIS EXAM INCLUDES 4 QUESTIONS. ATTEMPT TO ANSWER ALL QUESTIONS IN THE

EXAMINATION.

GOOD LUCK!

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QUESTION 1: 20 MARKS
From the descriptions below please identify and explain what type of business loan is
involved.
a) A temporary credit supports construction of homes, apartments, office buildings, and
other permanent structures.
b) A loan is made to an automobile dealer to support the shipment of new cars.
c) Credit extended on the basis of a business’s accounts receivable.
d) The term of an inventory loan is being set to match the length of time needed to
generate cash to repay the loan.
e) Credit extended up to one year to purchase raw materials and cover a seasonal need
for cash.
What term in the consumer lending field does each of the following statements describe?
a) Plastic card used to pay for goods and services without borrowing money
b) Loan to purchase an automobile and pay it off monthly
c) If you fail to pay the lender seizes your deposit
d) Loan based on spread between a home’s market value and its mortgage balance
e) Loans extended to low-credit-rated borrowers

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QUESTION 2: 20 MARKS
a. What is the financial planning process? [5]
b. What are the purposes of personal financial planning? [5]
c. If you are at the 30s, your income just matches with your spending. You have just
inherited $50,000 from your grandparents. What will you invest in to increase your
living standard and be able to travel abroad three or four times per year? [10]

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Question 3: 20 MARKS
Motivation Corporation, seeking renewal of its $12 million credit line, reports the data in the
following table (in millions of dollars) to Hot Springs National Bank’s loan department.
Please calculate the firm’s cash flow and determine what trends do you observe and what
are their implication for the decision to renew or not to renew the firm’s credit line?
2017 2018 2019 2020 Projection
for next
year
Cost of goods sold $5.1 $6.5 %5.7 $5.8 $6.0
Selling and administrative expenses 8.0 8.0 8.0 8.1 8.2
Sales revenues 7.9 8.5 9.2 9.4 9.8
Depreciation and other noncash expenses 11.2 11.2 11.1 11.0 11.0
Taxes paid in cash 4.4 4.6 4.9 4.8 4.8

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Question 4: 40 MARKS
Using the following set of documents to answer the following questions:
a. Who is the issuing bank?
b. Who is the advising bank?
c. Who is the applicant?
d. Who is the beneficiary?
e. What type of Letter of credit does it apply?
f. Explain the characteristics of this type of L/C in part (e)
g. When and where is the L/C expired?
h. What documents does this L/C require?
i. Does this set of documents meet the requirement in the L/C? If not, what is lacking?
j. When will the documents be presented?

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1All of the following are

sources of cash except:
a. an increase in long-term
debt.
b. a decrease in inventory.
c. a new equity issue.
d. a decrease in notes payable.
1. 1. All All of the following
are sources of cash except:
2. a. an increase in long-
term debt.
3. b. a decrease in inventory.
4. c. a new equity issue.
5. d. a decrease in notes
payabl

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6. PART I – SHORT ANSWER (40pts)

From the descriptions below please identify what type of business loan is involved.
a. A temporary credit supports construction of homes, apartments, office buildings,
and other permanent structures.
b. A loan is made to an automobile dealer to support the shipment of new cars.
c. Credit extended on the basis of a business’s accounts receivable.
d. The term of an inventory loan is being set to match the length of time needed to
generate cash to repay the loan.
e. Credit extended up to one year to purchase raw materials and cover a seasonal need
for cash.
f. A securities dealer requires credit to add new government bonds to his securities
portfolio.
g. Credit granted for more than a year to support purchases of plant and equipment.
h. A group of investors wishes to take over a firm using mainly debt financing.
i. A business firm receives a three-year line of credit against which it can borrow,
repay, and borrow again if necessary during the loan’s term.
j. Credit extended to support the construction of a toll road.
From the descriptions below please identify what type of business loan is involved.
a. A temporary credit supports construction of homes, apartments, office buildings,
and other permanent structures.
b. A loan is made to an automobile dealer to support the shipment of new cars.
c. Credit extended on the basis of a business’s accounts receivable.
d. The term of an inventory loan is being set to match the length of time needed to
generate cash to repay the loan.
e. Credit extended up to one year to purchase raw materials and cover a seasonal need
for cash.
f. A securities dealer requires credit to add new government bonds to his securities
portfolio.
g. Credit granted for more than a year to support purchases of plant and equipment.
h. A group of investors wishes to take over a firm using mainly debt financing.
i. A business firm receives a three-year line of credit against which it can borrow,
repay, and borrow again if necessary during the loan’s term.
j. Credit extended to support the construction of a toll road.
From the descriptions below please identify what type of business loan is involved.
a. A temporary credit supports construction of homes, apartments, office buildings,
and other permanent structures.
b. A loan is made to an automobile dealer to support the shipment of new cars.
c. Credit extended on the basis of a business’s accounts receivable.
d. The term of an inventory loan is being set to match the length of time needed to
generate cash to repay the loan.
e. Credit extended up to one year to purchase raw materials and cover a seasonal need
for cash.
f. A securities dealer requires credit to add new government bonds to his securities
portfolio.
g. Credit granted for more than a year to support purchases of plant and equipment.
h. A group of investors wishes to take over a firm using mainly debt financing.

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i. A business firm receives a three-year line of credit against which it can borrow,
repay, and borrow again if necessary during the loan’s term.
j. Credit extended to support the construction of a toll roaPART II

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