Explanation

Answer Example

I assess collateral quality by evaluating its liquidity, market value, and susceptibility to price fluctuations. For example, I prioritize highly liquid assets like government bonds or blue-chip equities over volatile assets. I also conduct stress tests to determine how collateral value holds up under adverse market scenarios. Recently, I approved a loan backed by government bonds, ensuring a 95% collateral-to-loan ratio during a volatile period, which safeguarded the loan’s value despite market fluctuations. This approach ensures the collateral remains sufficient to cover the loan at all times.