Blockchain Applications in Financial Services BFC Practice Questions (Page 4)

Questions 16–20

1. 16application · medium

   A DeFi protocol wants to allow users to borrow against their crypto assets. To protect lenders, the protocol must ensure that loans are overcollateralized. Which mechanism should the smart contract implement?

   • AA requirement that borrowers provide a credit score.
   • BA manual review process for each loan.
   • CA fixed interest rate that never changes.
   • DLiquidation of collateral if the collateral-to-loan ratio falls below a threshold.
   Reveal Solution Discussion Select an answer first
2. 17foundation · easy

   How can blockchain streamline the process of a letter of credit in trade finance?

   • ABy providing a shared, tamper-evident ledger of documents and events that all parties can access in real time.
   • BBy replacing the need for any documentation, as all terms are verbal.
   • CBy allowing the importer's bank to unilaterally approve the letter of credit without checking the exporter's documents.
   • DBy using a centralized database managed by the importer's bank to store all documents.
   Reveal Solution Discussion Select an answer first
4. 18foundation · easy

   In an insurance policy implemented as a smart contract, what would typically trigger an automatic payout to the policyholder?

   • AThe policyholder submitting a claim form through a web portal.
   • BA manual review by an insurance adjuster confirming the claim.
   • CAn oracle confirming that a predefined event (e.g., flight delay) has occurred.
   • DThe insurance company's CEO signing a digital approval.
   Reveal Solution Discussion Select an answer first
5. 19expert · hard

   A real estate tokenization platform wants to offer 24/7 trading of tokenized properties. However, securities regulators require that trading halt during certain hours and that only accredited investors participate. Which design best meets both the 24/7 trading goal and the regulatory constraints?

   • AA permissioned blockchain with smart contract logic that restricts trading to accredited investors and halts trading during mandated hours.
   • BA private blockchain that only allows trading during business hours and requires manual approval for each trade.
   • CA centralized exchange that operates 24/7 but does not verify investor accreditation.
   • DA public blockchain with no trading restrictions to ensure 24/7 liquidity.
   Reveal Solution Discussion Select an answer first
6. 20application · medium

   An insurance company wants to use smart contracts to automate claim payouts for flight delay insurance. The smart contract will receive flight status data from an external source and automatically pay the policyholder if a delay exceeds a threshold. What is the most important consideration when implementing this system?

   • AAllow policyholders to manually trigger the payout when they experience a delay.
   • BEnsure the external data source is reliable and tamper-proof.
   • CMake the smart contract code immutable to prevent any changes after deployment.
   • DStore the flight data on-chain permanently for audit purposes.
   Reveal Solution Discussion Select an answer first