Financial Forensics End Term: 1 September 2024, Set QDB3 (May 2024 term)

If a model predicts the positive class for all observations in a binary classification problem with both positive and negative cases present, which of the following statements is true?

What is the KS of the below gains table?

What is the Capture Rate of Bads at top 10%?

What is the Capture Rate of applications having score greater than 270?

The Bankruptcy Bank, one of the major lending banks, has hired you to build a credit underwriting model to help their automated lending decisions. Their definition of default is 60-89 DPD. There is historical loans data since January 1, 2021 till 31, July 2024. Which of the following is true – as of July 31, 2024?

Rollrate analysis is used to determine which of the following?

Which of the following possibly happens after approving credit?

Stemming is faster than Lemmatization

Which of the following is not a text preprocessing technique?

Given the sentence:
"Customer sign-up rates have increased by 25% in the last quarter."
Output:
['customer', 'sign', 'up', 'rates', 'increased', '25', 'last', 'quarter']
Which of the following text preprocessing techniques was NOT applied to the sentence?

Which of the following statements is true about a credit risk model with high precision?

If a credit risk model's recall is 0.7 and precision is 0.5, what can be inferred about its performance?

In reject inferencing, what is typically done with the rejected cases?

Which of the following can be a consequence of not using reject inferencing in models dealing with credit applications?

In a SHAP waterfall plot, what does the initial value represent?

How does SHAP facilitate global interpretability of a model?

If average total assets increase, but net income, net sales, and average stockholders' equity remain the same, what is the impact on the return on assets ratio?

Info Systems Inc. has sales of ₹ 2,820, costs of goods sold of ₹ 2,160, inventory of ₹ 504, and accounts receivable of ₹ 430. How many days, on average, does it take Info Systems Inc. to sell its inventory?

You have been awarded an insurance settlement of ₹ 250,000 that is payable one year from today. What is the minimum amount you should accept today in exchange for this settlement if you can earn 6.7 percent on your investments?

An insurance settlement offer includes annual payments of ₹ 36,000, ₹ 42,000, and ₹ 50,000 over the next three years, respectively, with the first payment being made one year from today. What is the minimum amount you should accept today as a lump sum settlement if your discount rate is 7 percent?

Scott has been offered an employment contract for ten years at a starting salary of ₹ 65,000 with guaranteed annual raises of 5 percent. What is the current value of this offer at a discount rate of 7 percent?

Which statement concerning the net present value (NPV) of an investment or a financing project is correct?

Wilson's Market is considering two mutually exclusive projects that will not be repeated. The required rate of return is 13.9 percent for Project A and 12.5 percent for Project B. Project A has an initial cost of ₹54,500, and should produce cash inflows of ₹16,400, ₹28,900, and ₹31,700 for Years 1 to 3, respectively. Project B has an initial cost of ₹69,400, and should produce cash inflows of ₹0, ₹48,300, and ₹42,100, for Years 1 to 3, respectively. Which project, or projects, if either, should be accepted and why?___________________

It’s always good to have the debt equity ratio of 1 to have a lower WACC:

Which of the following statements are true with respect to ACF and PACF plots
I. ACF plots are used to determining the order of Autoregressive models.
II. PACF plots are used to determining the order of Autoregressive models.
III. PACF plots just computes the Pearson’s correlation between the variable and it’s lagged versions.
IV. ACF plots just computes the Pearson’s correlation between the variable and it’s lagged versions.

What does the term 'liquidity' refer to in the context of a Balance Sheet?

A company has the following information:
• Total Assets: $500,000
• Total Liabilities: $300,000
• Retained Earnings: $100,000
If the company issues additional common stock worth $50,000, what will be the new Equity value?

Which of the following would NOT appear in the P&L statement?

ABC Bank has given INR 1,00,000 as an loan to it’s customer at the rate of 8.5% p.a. in January 2023. At the end of the year the customer paid back 1,08,500 to the bank. While preparing the cash flow statement for 2023 under which header will the bank account this cash inflow:

What is the Roll Back rate for 120-149 DPD after 18 MOB? (Express your answer as percentage)

What is the Roll Forward rate for 60-89 DPD after 18 MOB? (Express your answer as percentage)

XYZ Consulting paid dividends of ₹ 3,300 and total equity of ₹ 39,450. The debt-equity ratio is 1 and the retention ratio (the ratio of a company's retained income to its net income) is 40 percent. What is the return on assets expressed in percentage? __________________

Anu’s foods has net income of ₹ 39,900, net sales of ₹ 3,18,600, total assets of ₹ 6,63,000, common stock of ₹ 1,06,800 with a par value of ₹1 per share, and retained earnings of ₹ 2,24,400. The stock has a market value of ₹ 5.45 per share. What is the price-earnings ratio expressed in
percentage?_____________________

ABC Inc. has net working capital of ₹ 580, net fixed assets of ₹ 2,326, sales of ₹ 6,900, and current liabilities of ₹ 890. How many rupees worth of sales is generated from every ₹ 1 in total assets? _______________________

A firm has a return on equity of 25 percent. The total asset turnover is 2.4 and the profit margin is 8 percent. The total equity is ₹ 4,100. What is the net income? ________________________

Sully will receive a perpetuity of ₹ 40,000 per year forever, while Jake will receive 4,00,000 annual payment for the next 2 years. If the interest rate is 6.5 percent, how much more are Sully’s payments worth? _______________________

The risk-free rate of return is 3.6 percent and the market risk premium is 7.84 percent. What is the expected rate of return on a stock with a beta of 1.3?

Suppose the risk free rate in the market is 5%, the expected market return is 7% and the beta of the stock is 1.4, at what rate the expected return of a stock changes with respect to the market premium?

Holmes, Inc., is a 90% equity and 10% debt financed firm. The unlevered beta is 0.60, the market risk premium is 6.67 percent, and the risk-free rate is 3.30 percent. What is the expected rate of return on this stock? Consider the tax rate as 30%. Express your answer as a decimal.

A company has the following financials:
• Revenue: $750,000
• Cost of Goods Sold (COGS): $450,000
• Operating Expenses: $150,000
• Depreciation: $25,000
• Interest: $15,000
• Tax Rate: 35%
Based on the above data, answer the given subquestions.

Compute the EBITDA

A company has the following financials:
• Revenue: $750,000
• Cost of Goods Sold (COGS): $450,000
• Operating Expenses: $150,000
• Depreciation: $25,000
• Interest: $15,000
• Tax Rate: 35%
Based on the above data, answer the given subquestions.

Compute the Net Profit