AAFM Exam GLO_CWM_LVL_1 Topic 3 Question 62 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam

Question #: 62
Topic #: 3

"A borrower defaults on a secured loan of Rs. 50,000. The underlying security is worth Rs. 60,000. Which of the following is true? "

A'Bank can retain Rs. 50,000. Balance Rs. 10,000 has to be paid to the borrower.'

BBank cannot sell the underlying security because its value is higher than loan.

C'Bank can retain the entire Rs. 60,000'

D'The excess of Rs. 10,000 has to be shared equally between the bank and the borrower.'

Show Suggested Answer

Suggested Answer: B

by Nu at May 29, 2023, 06:17 AM

Limited Time Offer

25%

Off

Get Premium GLO_CWM_LVL_1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Desiree

1 months ago

This question is making my head spin. I need to take a break and do some yoga to clear my mind before tackling the next one.

upvoted 0 times

Loise

16 days ago

C) Bank can retain the entire Rs. 60,000

upvoted 0 times

...

Socorro

20 days ago

A) Bank can retain Rs. 50,000. Balance Rs. 10,000 has to be paid to the borrower.

upvoted 0 times

...

Lamonica

1 months ago

Hold up, if the security is worth more than the loan, can the borrower just take the bank out for a fancy dinner with the extra cash? Asking for a friend.

upvoted 0 times

Leslee

12 days ago

C) Bank can retain the entire Rs. 60,000

upvoted 0 times

...

Amira

17 days ago

No, the bank can keep the extra amount from the security.

upvoted 0 times

...

Rashad

20 days ago

A) Bank can retain Rs. 50,000. Balance Rs. 10,000 has to be paid to the borrower.

upvoted 0 times

...

Meaghan

2 months ago

I don't know, Option D sounds like the most equitable solution. The excess should be shared between the bank and the borrower.

upvoted 0 times

Lynda

8 days ago

I agree, Option D seems fair. Sharing the excess between the bank and the borrower makes sense.

upvoted 0 times

...

Adela

9 days ago

C) Bank can retain the entire Rs. 60,000

upvoted 0 times

...

Dustin

21 days ago

A) Bank can retain Rs. 50,000. Balance Rs. 10,000 has to be paid to the borrower.

upvoted 0 times

...

Marylyn

2 months ago

But the loan amount is only Rs. 50,000, so the bank should be able to retain the entire Rs. 60,000.

upvoted 0 times

...

Annamae

2 months ago

I disagree, I believe the correct answer is C.

upvoted 0 times

...

Marylyn

2 months ago

I think the answer is A.

upvoted 0 times

...

Rickie

2 months ago

Wait, so the bank can just keep the entire security even though it's worth more than the loan? That seems a bit unfair to the borrower.

upvoted 0 times

Lanie

2 days ago

The excess of Rs. 10,000 has to be shared equally between the bank and the borrower.

upvoted 0 times

...

Harley

6 days ago

Wait, that doesn't seem fair to the borrower at all.

upvoted 0 times

...

Rikki

8 days ago

Bank can retain the entire Rs. 60,000

upvoted 0 times

...

Val

12 days ago

A) Bank can retain Rs. 50,000. Balance Rs. 10,000 has to be paid to the borrower.

upvoted 0 times

...

Wilford

17 days ago

But shouldn't the borrower get back the excess amount if the security is worth more?

upvoted 0 times

...

Elfriede

18 days ago

It's to ensure the bank is fully compensated for the defaulted loan.

upvoted 0 times

...

Billy

20 days ago

C) Bank can retain the entire Rs. 60,000

upvoted 0 times

...

Lettie

1 months ago

Wait, the bank can only keep the amount of the loan? That doesn't seem fair to them.

upvoted 0 times

...

Vernell

1 months ago

A) Bank can retain Rs. 50,000. Balance Rs. 10,000 has to be paid to the borrower.

upvoted 0 times

...

Levi

2 months ago

A) Bank can retain Rs. 50,000. Balance Rs. 10,000 has to be paid to the borrower.

upvoted 0 times

...

Dolores

2 months ago

But the security is worth more than the loan amount, so the bank should be able to retain the entire Rs. 60,000.

upvoted 0 times

...

Cortney

2 months ago

Option C is the correct answer. The bank can retain the entire Rs. 60,000 since the borrower has defaulted on the loan.

upvoted 0 times

...

Alethea

2 months ago

I disagree, I believe the correct answer is C.

upvoted 0 times

...

Dolores

3 months ago

I think the answer is A.

upvoted 0 times

...