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Question 1
In the IFRS 9 expected credit loss (ECL) framework, what is the standard decomposition of the ECL for a credit exposure over a given horizon?
Correct Answer:
ECL = PD x LGD x EAD (appropriately discounted)
Question 2
Under IFRS 9, a performing loan with no significant increase in credit risk since origination is classified in which stage, and what ECL is recognised?
Correct Answer:
Stage 1, with 12-month ECL and interest on gross carrying amount
Question 3
A bank's exposure at default is GBP 500,000, the LGD is 40% and the 12-month PD is 2%. Ignoring discounting, what is the 12-month expected credit loss?
Correct Answer:
GBP 4,000
Question 4
Which definition best describes Loss Given Default (LGD) in a credit-risk model?
Correct Answer:
The proportion of the exposure that is lost if default occurs, net of recoveries
Question 5
Under IFRS 9, what is the primary trigger for moving a financial asset from Stage 1 to Stage 2?
Correct Answer:
A significant increase in credit risk since initial recognition
Question 1
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About this Exam

Prepare with the IFoA SP10 Practice Questions - IFoA SP10 Banking Specialist Principles Exam practice quiz. This question bank includes 100 questions covering bank, risk, basel, capital, and ratio. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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IFoA SP10 Practice Questions - IFoA SP10 Banking Specialist Principles Exam

This practice set contains 100 questions from the matching question bank and focuses on bank, risk, basel, capital, and ratio. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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