CRCM Exam Dumps | First National Bank made a loan to a nonbank affiliate of its holding company that is secured by stocks,

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Question 78/253

First National Bank made a loan to a nonbank affiliate of its holding company that is secured by stocks, bonds, and debentures. At the outset of the loan, First National had collateral with a market value equal to
150 percent of the loan amount. Over time, some of the collateral has been retired and amortized. Some has dropped in value. What is the responsibility of the bank regarding the collateral?

A. The bank must annually check the value of the collateral to ensure that the percentage of value is maintained.

B. The bank must check values every month to ensure that the percentages are correct at all times.

C. The bank has no responsibility once the loan is made provided the percentages were correct at the loan's inception.

D. The bank must check values when the collateral is retired or amortized to make sure the collateral is replaced with securities that will bring the loan into compliance with the percentages required in the law.

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Question 78/253

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