CFA论坛 - Powered by Discuz! Board

标题: Fixed Income【Reading 48】Sample [打印本页]

作者: manchester88 时间: 2012-4-2 16:06 标题: [2012 L2] Fixed Income【Session 14- Reading 48】Sample

Which of the following is NOT a component of credit risk?

A)	Credit spread risk.

B)	Interest rate risk.

C)	Default risk.

Credit risk is made up of 3 components that include default risk, credit spread risk and downgrade risk.

作者: manchester88 时间: 2012-4-2 16:07

Brad Taylor is a portfolio manager for a small firm that caters to high net worth individuals. He invests substantial amounts of his clients’ assets in fixed incomes securities, while his partner deals primarily with his clients’ equity investments. Taylor’s particular areas of analytical expertise include corporate bonds, asset-backed securities (ABS), and foreign government bonds. Being in a small firm, Taylor is involved in every aspect of managing the fixed income portion of the portfolio, from the initial identification of a potential investment, to the analysis, and on to the purchase decision. In addition, he also performs an ongoing analysis of assets currently held in the portfolio.
As the size of the portfolio has grown over the past two years, Taylor has become increasingly aware of the fact that he needs to acquire additional support staff in order to adequately perform his fiduciary duties. He has recently hired a new trading assistant, Donald Johnson, whose prior position was at a firm that invested exclusively in equity securities. Johnson has not had much experience in the analysis of fixed income securities and realizes that there are some significant differences between the credit analyses of equities versus that of fixed income securities. He is trying to understand how to evaluate the credit quality of fixed income securities in the specific sectors of corporate bonds, ABS, and foreign government bonds. Taylor suggests that to begin, Johnson should review one of Taylor’s old fixed income textbooks, to become more familiar with the concepts. Johnson needs to be able to identify which key ratios are used in fixed income analysis, how to calculate them, and the how to interpret them. He is familiar with basic mechanics of a cash flow analysis of an equity investment, but needs to understand why and how cash flow from operations can affect the value of a fixed income security. In addition, Taylor expects Johnson to quickly have a strong working knowledge of each of the following areas: corporate bonds and the measurement of their capitalization and solvency; ABS and the factors that will determine an issue’s rating; and foreign government bonds and the economic and political risks that can affect their performance.Johnson is not sure what is meant by a short-term solvency ratio. Which of the following ratios is a measure of short-term solvency?

A)	EBIT interest coverage ratio.

B)	Current ratio.

C)	Total debt to capitalization ratio.

The current ratio is defined as current assets divided by current liabilities. It is a measure of the adequacy of liquid assets for meeting short-term obligations as they come due. The total debt to capitalization ratio is equal to the sum of current liabilities and long-term debt divided by the sum of long-term debt and shareholders’ equity. It includes longer term assets and liabilities that are not as liquid.
The EBIT interest coverage ratio is earnings before interest and taxes divided by the annual interest expense. It is not a suitable measure of short-term solvency. (Study Session 14, LOS 48.c)

Johnson has read about the importance of coverage ratios in order to evaluate the credit risk of a corporate bond. Which of the following statements is most correct? Coverage ratios are used to:

A)	judge the capital adequacy of liquid assets for meeting short-term obligations as they come due.

B)	test the adequacy of cash flows generated through earnings for purposes of meeting debt and lease obligations.

C)	determine the capital adequacy of long-term assets to meet long-term debt obligations.

Examples of coverage ratios are: EBIT interest coverage ratio, EBITDA interest coverage ratio, funds from operations to total debt ratio, and free operating cash flow to total debt ratio. (Study Session 14, LOS 48.c)

Johnson asks Taylor to calculate discretionary cash flow using S&P’s cash flow framework as defined in its Corporate Ratings Criteria. Which of the following is the most correct? A discretionary cash flow:

A)	is equal to free operating cash flow − acquisitions + asset disposals + other miscellaneous sources (uses).

B)	is equal to net income + depreciation +- other noncash charges.

C)	remains available to a company after it funds its operating requirements, capital expenditures, and cash dividends.

Discretionary cash flow is defined in the S&P cash flow framework as operating cash flow − capital expenditures − cash dividends
(Study Session 14, LOS 48.e)

Johnson turns his attention to ABSs. Which of the following is the least important factor considered by rating agencies in assigning a credit rating to ABS?

A)	Quality of the seller/servicer.

B)	Cash flow stress and payment structure.

C)	Covenants of the lending agreement.

Lending agreement covenants are not a major factor considered by rating agencies.
The role of the servicer is critical in an asset-backed security transaction. Therefore, rating agencies look at the ability of a servicer to perform all the activities that a servicer will be responsible for.
The payment structure of an asset-backed security transaction can be either a passthrough or pay through structure. This has important implications for the distribution of the cash flows to the different tranches of the security. (Study Session 14, LOS 48.b)

Taylor explains to Johnson that there are major differences between ABS and corporate bonds in terms of credit risk. Which of the following is a major difference? ABS have:

A)	a smaller predictability of cash flows due to the higher operational risk.

B)	a greater predictability of cash flows due to the absence of operational risk.

C)	the same predictability of cash flows but a lower operational risk.

In an ABS transaction the role of the servicer is to simply collect the cash flows. There is no active management with respect to the collateral and so very little operational risk associated with cash flows. Conversely, corporate management includes tremendous operational risk. (Study Session 14, LOS 48.a, b)

Taylor tries to explain the subtleties of foreign sovereign debt to Johnson. Which of the following is least likely a factor used in assessing the credit quality of a national government's local currency debt?

A)	Balance of payments and external balance sheet structure.

B)	Monetary policy and inflation pressures.

C)	Income and economic structure.

In assessing the credit quality of local currency debt, only domestic government policies that emphasize fostering or impeding timely debt service are considered. Only for foreign currency debt will credit analysis focus on the interaction of domestic and foreign government policies as measured by a country's balance of payments and the structure of its external balance sheet. (Study Session 14, LOS 48.d)

作者: manchester88 时间: 2012-4-2 16:07

An unanticipated deterioration in the credit quality of an issuer that results in a decline in the price of the issue is referred to as:

A)	credit extraction risk.

B)	downgrade risk.

C)	default risk.

Credit risk encompasses three distinct types of risk: Downgrade risk is the risk that the credit quality of an issuer will fall, resulting in a downgrade by the credit rating agencies, which will also cause the bond price to fall, and/or cause the bond to underperform its benchmark. Default risk is the risk that the borrower will not repay the obligation. Credit extraction risk has no meaning in this context.

作者: manchester88 时间: 2012-4-2 16:08

Credit ratings measure which type of risk associated with credit obligations?

A)	Credit risk.

B)	Downgrade risk.

C)	Default risk.

Credit ratings focus on the risk of default based on a number of quantitative measures.

作者: manchester88 时间: 2012-4-2 16:08

The risk that an issuer’s debt obligation will fall in value because the required risk premium for the debt obligation has increased is referred to as:

A)	credit risk.

B)	downgrade risk.

C)	credit spread risk.

If the required risk premium increases, all else being equal, the value of the debt will decrease. This is known as credit spread risk.

作者: manchester88 时间: 2012-4-2 16:08

The risk that the borrower will fail to repay the credit obligation is referred to as:

A)	credit spread risk.

B)	default risk.

C)	credit risk.

Default risk is the risk that the creditor will fail to make timely payments of principal and interest.

作者: manchester88 时间: 2012-4-2 16:09

Which of the following is NOT one of the criteria used to conduct a credit examination?

A)	Character.

B)	Covenants.

C)	Consideration.

The four C's of credit are character, capacity, collateral, and covenants.

作者: manchester88 时间: 2012-4-2 16:09

Which of the following is one of the four Cs of credit analysis?

A)	Commitment.

Capacity.

Capital.

The four Cs of credit are character, capacity, collateral, and covenants.

作者: manchester88 时间: 2012-4-2 16:09

Which of the following is least likely considered a strong and reliable source of liquidity for a company undergoing a credit analysis?

A)	Ability to use asset securitization.

B)	Line of credit.

C)	Contractual back-up facility.

A line of credit is generally not contractual making it easy for banks to refuse to extend the credit.

作者: manchester88 时间: 2012-4-2 16:09

Which of the following statements regarding the analysis of an issuer’s capacity to pay is least accurate?

A)	An analyst should examine the firm's financial position over the past three to five years to help determine capacity to pay.

B)	A noncontractual line of credit is viewed as a strong back-up facility.

C)	A "material adverse change clause" would weaken a back-up facility.

A strong back-up facility exists when a lender is contractually obligated to provide back-up financing. If the agreement is noncontractual then the back-up facility is considered weak.

作者: manchester88 时间: 2012-4-2 16:10

Which of the following is most likely to affect the analysis of a firm's ability to repay the interest and principal components of its debt?

A)	The level of the company's debt to total assets ratio.

B)	The character of the firm's management.

C)	The firm's ability to generate operating cash flows.

Although we would look at the company's debt-to-total assets ratio in determining the company's ability to repay its debt, the operating cash flows tend to be more critical to the analysis.

作者: manchester88 时间: 2012-4-2 16:10

Which of the following factors is least likely part of the analysis of an issuer’s character?

A)	Conservatism.

B)	Executive compensation and benefits structure.

C)	Succession planning.

Executive compensation structure is not part of the credit analysis. Credit agencies generally try to assess management quality by understanding business strategies and policies created by management.

作者: manchester88 时间: 2012-4-2 16:10

Which of the following factors is NOT part of the analysis of an issuer’s character?

A)	Control systems.

B)	Financial philosophy.

C)	Parent company support agreements.

Parent company support agreements are part of the analysis of the capacity of the issuer to pay rather than the issuer’s character.

作者: manchester88 时间: 2012-4-2 16:13

Which of the following least likely represent sources of liquidity for a company?

A)	Operating cash flows.

B)	Back-up credit facilities.

C)	Investing cash outflows.

Of the three elements, the investing cash outflows would not be a source of liquidity for the firm

作者: manchester88 时间: 2012-4-2 16:13

Which of the following criteria assesses the ability of the issuer to repay its obligations?

Capital.

B)	Commitment.

Capacity.

When an analyst examines an issuer’s capacity, the analyst is assessing the issuer’s ability to repay its obligations.

作者: manchester88 时间: 2012-4-2 16:14

Which of the following 4-C's of credit refers to the terms and conditions of the lending agreement?

A)	Contracts.

B)	Conditions.

C)	Covenants.

Covenants represent the terms and conditions of the lending agreement. Covenants specify restrictions and requirements that management must follow.

作者: manchester88 时间: 2012-4-2 16:14

All of the following are part of the four C’s of credit that Moody’s and S&P use to analyze credit quality EXCEPT:

capacity.

B)	covenants.

category.

The four C’s of credit are character, capacity, collateral, and covenants.

作者: manchester88 时间: 2012-4-2 16:15

Which of the following items is least likely of concern to the analyst when trying to assess the capacity of the firm to pay its debt?

A)	Affirmative covenants.

B)	Third-party guarantees.

C)	Ability to securitize assets.

When assessing capacity to pay, the analyst is concerned with the company’s financial position and liquidity. Sources of liquidity include working capital, operating cash flows, back-up credit facilities, securitization of assets, and third-party guarantees. Affirmative covenants are not directly related to the firm's capacity to pay.

作者: manchester88 时间: 2012-4-2 16:15

Which of the following factors is part of the analysis of an issuer’s character?

A)	Strategic direction.

B)	Company structure.

C)	Basic operating position.

Important considerations of the issuer’s character include: strategic direction, financial philosophy, conservatism, track record, succession planning, and control systems.

作者: manchester88 时间: 2012-4-2 16:15

Within the context of the 4-C’s of credit analysis, which of the following most accurately describes the “capacity” of a firm?

A)	The integrity of management and their commitment toward repayment of the loan.

B)	The availability of cash flow and other assets required by a corporation to repay its obligations.

C)	The terms and conditions of the loan agreement.

Capacity is one of the 4-C's of credit analysis and deals with generation of cash flows.

作者: manchester88 时间: 2012-4-2 16:16

Within the context of the 4-C’s of credit analysis, which of the following most accurately describes the “character” of a firm?

A)	The integrity of management and its commitment toward the repayment of the loan.

B)	The terms and conditions of the loan agreement.

C)	The availability of cash flow and other assets to repay the loan.

"Character" is the integrity of the firm's management and its commitment to the loan.

作者: manchester88 时间: 2012-4-2 16:17

Which of the following focuses on analyzing the quality of management?

A)	Capacity analysis.

B)	Compensation analysis.

C)	Character analysis.

Character analysis is the act of assessing the quality of management, which is an important factor in assessing the issuing company’s credit strength.

作者: manchester88 时间: 2012-4-2 16:17

Rating agencies consider all of the following when assessing the quality of a firm's management EXCEPT:

A)	Ability to react to unexpected events.

B)	Human resources policy.

C)	Strategic direction.

Of the factors listed, the firm's human resouces policies would be the least important factors considered when assessing management quality.

作者: manchester88 时间: 2012-4-2 16:17

All of the following are elements of the "4 C's" of credit analysis EXCEPT:

Capacity.

Coverage.

C)	Character.

The other two are covenants and collateral.

作者: manchester88 时间: 2012-4-2 16:18

Which of the following accounting practices is least likely to have a significant impact on the balance sheet ratios of a firm?

A)	Leasing accounting.

B)	Inventory cost flow decisions.

C)	Diluted versus basic EPS.

LIFO/FIFO and operating leasing v. capital leasing can both have a major impact on the balance sheet ratios of the firm.

作者: ikoreaii 时间: 2012-4-2 16:20

Which of the following statements regarding the use of traditional ratios to analyze a firm’s financial condition is least accurate?

A)	Financial ratios are based on the historical accounting data of the firm.

B)	Financial ratios do not reveal any information regarding the future capital requirements of the firm.

C)	Many of the financial ratios can be used to assess the future financial position of the company.

Traditional financial ratios have limited use in that they are not forward looking.

作者: ikoreaii 时间: 2012-4-2 16:20

Traditional financial ratios are useful in providing information regarding the firm’s:

A)	competitive position.

B)	financial position at a given point in time.

C)	future earning prospects.

Traditional financial ratios provide a snapshot of the firm’s financial condition at a particular point in time. They are not forward looking.

作者: ikoreaii 时间: 2012-4-2 16:21

The office furniture industry is highly cyclical. Which of the following is least likely a limitation of ratio analysis for the office furniture industry?

A)	A recession could significantly change the financial condition of the company.

B)	Cyclical companies do not have accurate industry comparisons due to the more volatile changes in ratios.

C)	Ratio analysis relies on historical information.

Different standards apply to cyclical companies versus stable companies, but accurate industry comparisons are still possible. The major limitation of ratio analysis is that it is not forward looking because it does not consider factors that can impact future cash flows.

作者: ikoreaii 时间: 2012-4-2 16:21

The use of coverage ratios when assessing a firm's ability to repay its debt is most likely to be focused on which of the following?

A)	The availability of liquid assets to meet short-term obligations.

B)	An examination of the adequacy of cash flows generated through earnings to meet debt obligations.

C)	An examination of additional risk associated with increased borrowing.

Coverage tests examine the adequacy of cash flows generated through earnings to meet debt obligations.

作者: ikoreaii 时间: 2012-4-2 16:21

Which ratio group measures the firm's ability to generate enough cash flow through its earnings to meet its debt and lease obligations?

A)	Profitability ratios.

B)	Coverage ratios.

C)	Short-term solvency ratios.

Coverage ratios test the adequacy of cash flows generated through earnings to meet debt and lease obligations.

作者: ikoreaii 时间: 2012-4-2 16:22

Which of the following ratios is NOT used to assess the adequacy of cash flows generated through earnings that can be used to meet debt and lease obligations?

A)	Earnings before interest and taxes (EBIT) interest coverage ratio.

B)	Funds from operations/total debt ratio.

C)	Total debt to capitalization ratio.

The total debt to capitalization ratio measures the firm’s ability to manage the additional risk associated with additional leverage.

作者: ikoreaii 时间: 2012-4-2 16:22

Which ratio group measures the firm’s ability to manage the additional risk associated with increased borrowing?

A)	Coverage ratios.

B)	Short-term solvency ratios.

C)	Capitalization ratios.

Capitalization ratios measure the firm’s ability to service its debt. Two of these measurements include the long-term debt to capitalization ratio and the total debt to capitalization ratio. The higher the ratios, the less able the firm is to manage additional debt.

作者: ikoreaii 时间: 2012-4-2 16:23

Which of the following is NOT a means of determining whether a firm is able to pay its obligations as they come due?

A)	Acid-test ratio.

B)	Profit margin.

C)	Working capital.

Adequate working capital is important in meeting current liabilities. Two ratios that help assess working capital are the acid-test ratio and the current ratio.

作者: ikoreaii 时间: 2012-4-2 16:24

Each of the following statements is an integral part of the debt rating process EXCEPT:

A)	compare the effects of earnings per share dilution of the firm under analysis to other firm's within the industry with respect to recent equity issuances.

B)	calculate the company's solvency, capitalization, and coverage ratios.

C)	compare the company's solvency, capitalization, and coverage ratios to the average ratios of other firms in various rating categories.

In a credit analysis setting, the impact of EPS dilution is not likely to be a major concern.

作者: ikoreaii 时间: 2012-4-2 16:24

Which of the following would indicate a lessened capacity by a corporate bond issuer to pay principal and interest? Relative to the industry average, the issuer’s:

A)	interest expense is lower relative to earnings.

B)	acid-test ratio is lower.

C)	equity is higher relative to its long-term debt.

The acid-test ratio is the current assets minus inventory divided by the firm’s current liabilities. A lower acid-test ratio would indicate lessened capacity to pay principal and interest. In essence, there is less assets to cover the firm’s current obligations. Higher equity relative to debt indicates greater capacity to pay. Lower interest expense indicates greater capacity to pay.

作者: ikoreaii 时间: 2012-4-2 16:25

Discretionary cash flow is defined as (net earnings + depreciation + deferred income taxes − noncash revenue items included in net earnings − increase in adjusted noncash working capital − capital expenditures − cash dividends). This definition is equivalent to which of the following?

A)	Cash from financing − dividends payable.

B)	Cash from investing − cash from operations (CFO).

C)	Free operating cash flow − cash dividends.

CFO = net earnings + depreciation + deferred income taxes − noncash revenue items included in net earnings − increase in adjusted noncash working capital. Hence, discretionary cash flow = CFO − capital expenditures

作者: ikoreaii 时间: 2012-4-2 16:26

Which of the following statements about the ratio of cash flow from operations to capital expenditures is least accurate?

A)	An increasing ratio may imply that the firm has recently expanded but has not yet generated the increased cash flow from operations necessary to bring the ratio back to its normal level.

B)	The higher the ratio, the greater the financial flexibility.

C)	This ratio is especially useful for capital intensive firms and utility companies.

A declining ratio may indicate that the firm has gone through a major capital expansion and needs more time before cash flow from operations will increase enough to bring the ratio back up again.

作者: ikoreaii 时间: 2012-4-2 16:26

Which of the following statements addressing the use of cash flow analysis to assess the ability of the issuer to service its debt is least accurate?

A)	Discretionary cash flow can be used to determine the company's ability to pay down its debt obligation.

B)	The level of discretionary cash flow indicates how safe is the company's dividend.

C)	The ratio of cash flow from operations to long-term debt is an indicator of a firm's flexibility with regard to financing decisions.

When it comes to financing decisions, an indicator of financial flexibility is the ratio of cash flow from operations to capital expenditures.

作者: ikoreaii 时间: 2012-4-2 16:27

Discretionary cash flow is defined as:

A)	net income + noncash expenses ± changes in current assets and current liabilities (excluding cash).

B)	net income + depreciation +/– other noncash items + decrease (increase) in noncash current assets + increase (decrease) in nondebt current liabilities - capital expenditures - cash dividends.

C)	net income + noncash expenses - noncash revenue items included in net income.

Discretionary cash flow = net income + depreciation +/– other noncash items + decrease (increase) in noncash current assets + increase (decrease) in nondebt current liabilities - capital expenditures - cash dividends.
It represents the cash flow available to a firm after it has funded its basic operating requirements.

作者: ikoreaii 时间: 2012-4-2 16:28

Which of the following is NOT a feature of bank debt?

A)	Bank loan contracts generally have little or no negative covenants.

B)	Bank debt generally has priority over other debt holders on the firm's assets.

C)	The interest rate on bank loans is generally a floating rate.

Bank loan contracts usually contain several negative covenants. Furthermore, bank debt is generally short-term, variable rate, and higher priority relative to other debt holders.

作者: ikoreaii 时间: 2012-4-2 16:29

Which of the following statements is most accurate regarding the issuance of high yield debt under a holding company structure?

A)	Debt is borrowed at the parent company level and funds to pay the obligation are obtained from operating subsidiaries.

B)	The analysis of subsidiary financial ratios and performance is unimportant because the debt repayment is made from the parent's cash flows.

C)	Debt is borrowed at the subsidiary level and funds to pay the obligation are obtained from the parent company.

Debt is borrowed at the parent company level and funds to pay the obligation are obtained from operating subsidiaries.

作者: ikoreaii 时间: 2012-4-2 16:30

High yield debt structures will least likely have which of the following characteristics?

A)	Bank debt.

B)	Payment-in-kind bonds.

C)	Well collateralized senior debt.

It is unlikely that high yield debt will be well collateralized. If a high yield issue is collateralized, the collateral will be on an uncertain nature.

作者: ikoreaii 时间: 2012-4-2 16:30

Which of the following statements regarding loan covenants is least accurate?

A)	Loan covenant analysis is seldom used in the analysis of high-yield issues.

B)	Empirical studies have found the returns of high-yield bonds to be more highly correlated with equity returns than with returns on investment grade bonds.

C)	Banks have a higher priority claim over a firm's assets.

Loan covenant analysis is especially important in the analysis of high-yield issues. Typically restrictive covenants are used to limit the corporate manager’s ability to participate in more speculative investments. The intentions of management may be revealed by their objections to certain covenants that they may interpret as “too restrictive.” Both of the other statements are true.

作者: ikoreaii 时间: 2012-4-2 16:31

When analyzing the credit risk of the holding company, it is critical for the analyst to focus on all of the following EXCEPT:

A)	the cash flows generated by the subsidiary.

B)	ratio analysis of the parent company.

C)	how cash flows move between subsidiaries.

The ratio analysis of the parent company provides little insight into the financial health of the company since the cash flows come from the subsidiary units of the parent company.

作者: ikoreaii 时间: 2012-4-2 16:31

Which of the following statements regarding the analysis of covenants for high-yield issuers is least accurate?

A)	An analysis of covenants is more critical for high-yield issuers than for investment grade issuers.

B)	An analyst should examine whether a no contest clause exists that may change the priority of the claims of the firm's debtholders.

C)	Covenants provide important insight into the issuing company's strategy.

It is especially important to analyze the covenants of a high yield issuer to gain insight into corporate strategy.

作者: ikoreaii 时间: 2012-4-2 16:31

When analyzing the credit risk of a holding company, it is important to understand:

A)	the corporate structure.

B)	the diversity of the subsidiaries.

C)	the lines of succession.

It is important to understand the corporate structure so the analyst can determine how cash is passed from subsidiaries to the parent company and to other subsidiaries.

作者: ikoreaii 时间: 2012-4-2 16:32

Which of the following debt obligations exposes the firm to the risk of illiquidity due to rising interest rates?

A)	Subordinated fixed-rate debt.

B)	Reset notes.

C)	Bridge loans.

A reset note is a debt obligation where the coupon interest rate is reset periodically. As a result, the analyst needs to assess the impact that rising interest rates would have on the firm’s ability to honor these security contracts.
Subordinated fixed-rate debt is debt that is paid after other more senior debt is paid off.
A bridge loan is a short-term loan made in anticipation of intermediate-term and long-term financing.

作者: ikoreaii 时间: 2012-4-2 16:32

All of the following are characteristics of bank debt EXCEPT:

A)	Banks have a high priority over the assets of the firm.

B)	Bank debt tends to have a principal value that is indexed to the rate of inflation.

C)	Bank debt is usually floating rate debt.

Bank debt tends NOT to have a floating principal value.It does however typically have seniority over other claims and is usually at floating interest rates

作者: ikoreaii 时间: 2012-4-2 16:32

Which of the following statements regarding the debt structure of a high-yield issuer is least accurate?

A)	High yield issuers rely on bank loans to a greater extent than investment-grade issuers.

B)	Senior bondholder claims are subordinate to claims of bank loans.

C)	A high-yield issuer can rely on a high-interest bank loan to provide liquidity if the firm has sufficient assets to cover at least 70% of the bank's claim.

A bank will not grant a high-yield issuer a loan unless it has sufficient assets to cover the full loan amount. If the high-yield issuer cannot meet this requirement then it must defer to bridge loans and/or reset notes.

作者: ikoreaii 时间: 2012-4-2 16:33

Which of the following is NOT a primary factor considered by rating agencies in rating asset-backed securities?

A)	Event risk.

B)	Legal structure.

C)	Credit quality of the collateral.

When rating asset-backed securities, the rating agency considers collateral credit quality, seller/service quality, cash flow stress, and payment structure and legal structure.

作者: ikoreaii 时间: 2012-4-2 16:33

The most important issue for the credit analysis of an asset-backed security is:

A)	quality of collateral.

B)	quality of the seller/servicer.

C)	legal structure.

The analyst must determine the quality of the collateral. The collateral must generate the needed cash flow to service the debt.

作者: ikoreaii 时间: 2012-4-2 16:33

Which of the following is NOT a primary factor considered by rating agencies in rating asset-backed securities?

A)	Character of the underwriter.

B)	Seller/service quality.

C)	Cash flow stress.

When rating asset-backed securities, the rating agency considers collateral credit quality, seller/service quality, cash flow stress, and payment structure and legal structure.

作者: ikoreaii 时间: 2012-4-2 16:34

Which of the following statements regarding factors considered by rating agencies in rating asset-backed securities is least accurate?

A)	A firm's credit rating must be less than or equal to its overall corporate rating.

B)	The borrower's equity in an asset that has been offered as collateral is the primary determinant of whether the borrower will default or sell the asset to pay off the loan.

C)	The servicer of the loan must be evaluated since the servicer is responsible for distributing proceeds to the bondholders, determining the interest rate for the period, and advancing payments when there are delinquencies.

If a firm has structured securitized assets so that, in the event of bankruptcy, the courts will not apply the cash flow from the collateral toward the satisfaction of general corporate liabilities, then it is possible to obtain a credit rating higher than its overall corporate rating.

作者: ikoreaii 时间: 2012-4-2 16:34

When assessing the risk of tax-backed municipal bonds, it is important to analyze all of the following factors EXCEPT:

A)	whether there are sufficient covenants to ensure revenues are not redirected for purposes other than the payment of tax-backed municipal bonds.

B)	the issuer's ability and political discipline to maintain a sound budgetary policy.

C)	evaluating the issuer's socioeconomic environment.

When evaluating tax-backed debt the analyst should assess the issuer’s debt structure, budgetary policy, local tax and intergovernmental revenue availability, and the issuer’s socioeconomic environment.

作者: ikoreaii 时间: 2012-4-2 16:35

Which of the following securities is analyzed in much the same way as corporate bonds?

A)	Foreign currency debt securities.

B)	Municipal tax-backed debt.

C)	Municipal revenue bonds.

Revenue bonds are evaluated much like corporate bonds, because the primary concern is whether or not enough cash flow will be generated to satisfy the debt obligations.

作者: ikoreaii 时间: 2012-4-2 16:36

Which of the following factors used to assess municipal tax-backed debt analyzes the issuer’s ability to manage general operating funds?

A)	Issuer's debt structure.

B)	Budgetary policy.

C)	Local tax and intergovernmental revenue availability.

The analysis of budgetary policy entails the assessment of the issuer’s ability to manage general operating funds.

作者: ikoreaii 时间: 2012-4-2 16:36

Each of the following factors are employed in the assessment of "tax-backed" municipal bonds EXCEPT:

A)	Credit quality of the collateral.

B)	Issuer's debt structure.

C)	Local tax availability.

There is typically no collateral pledged to a general obligation municipal bond.

作者: ikoreaii 时间: 2012-4-2 16:36

Which of the following statements regarding the comparison of "general obligation" and "revenue" municipal bonds is least accurate?

A)	Revenue bonds are backed by the full faith and credit of the issuing municipality.

B)	Revenue bonds must be evaluated with respect to their covenants such that revenues from the project are not redirected toward other uses within the community.

C)	General obligation bonds must be evaluated with respect to the issuer's existing debt structure and the ability of the local government to generate the requisite level of taxes to repay the debt.

The cash flows (revenue) from the project that the revenue bond funded are used to service the bond.

作者: ikoreaii 时间: 2012-4-2 16:37

What is the key difference between a local currency debt rating and a foreign currency debt rating?

A)	A foreign currency debt rating relies on the country's ability to generate appropriate foreign currency cash flows via its trade flows.

B)	Local currency debt ratings are uncorrelated with the country's foreign currency debt ratings.

C)	A foreign currency debt rating depends primarily upon the economic infrastructure of the economy and the level of education and living standards in the country.

A foreign currency debt rating relies on the country's ability to generate appropriate foreign currency cash flows via its trade flows.

作者: ikoreaii 时间: 2012-4-2 16:38

Which of the following is least likely a factor used by Standard & Poor’s rating agency to assess the creditworthiness of a government’s foreign currency debt?

A)	Income and economic structure.

B)	Net public debt.

C)	Country's balance of payments.

For foreign currency debt, Standard & Poor analyzes a country’s balance of payments, net public debt, total net external debt and net external liabilities.

作者: ikoreaii 时间: 2012-4-2 16:38

Which of the following statements regarding sovereign bond issues is least accurate?

A)	Defaults are greater on local currency issues than foreign currency issues.

B)	The two general categories used by Standard & Poor’s in deriving sovereign ratings are economic risk and political risk.

C)	There is a local currency rating and a foreign currency rating assigned to each national government.

Defaults are greater on foreign currency issues because a national government has little control with respect to its exchange rate and must purchase foreign currency to repay its foreign currency obligation.

作者: ikoreaii 时间: 2012-4-2 16:38

Which of the following is the primary concern of a rating agency when rating the foreign currency debt of a sovereign nation?

A)	The government debt burden and debt service experience.

B)	Political stability and the extent of the participation of the populace in the political process.

C)	The country's balance of payments and its ability to generate the appropriate foreign currency cash flows.

The key to the evaluation of the foreign currency debt of the nation is the country's balance of payments and its ability to generate the appropriate foreign currency cash flows.

作者: ikoreaii 时间: 2012-4-2 16:39

Each of the following factors is analyzed relative to a country's willingness to repay its sovereign debt EXCEPT:

A)	internal security risks.

B)	the degree of economic and industrial diversification.

C)	the participation of the population in the political process.

The degree of economic and industrial diversification deals with the ability, not willingness, of a country to repay its sovereign debt.

作者: ikoreaii 时间: 2012-4-2 16:40

Which of the following is a component of political risk?

A)	The existence of either a market or non-market economy.

B)	Integration in global trade and financial system.

C)	Governmental operating and budget balances.

Political risk is the assessment of the form of government, extent of popular participation, orderliness of leadership succession, degree of consensus on economic policy objectives, integration in global trade and financial systems, and internal and external security risks.

作者: ikoreaii 时间: 2012-4-2 16:40

Political risk is best described as:

A)	an assessment of the willingness of a national government to satisfy its debt obligations.

B)	an assessment of the ability of a national government to service its debt.

C)	a quantitative evaluation of political factors that influence economic policies.

Political risk is a qualitative issue that addresses the willingness of a national government to pay its debt obligations.

作者: Mechanic 时间: 2012-4-2 16:41

Which of the following is NOT a factor used by Standard & Poor’s rating agency to assess the creditworthiness of a government’s local currency debt?

A)	The public debt burden and debt service track record.

B)	The country's balance of payments.

C)	Degree of participation by the populace in the political process.

Standard & Poor examines any government policies that could foster or interfere with timely debt service. These factors include the stability of political institutions and degree of popular participation in the political process, income and economic structure, fiscal policy, monetary policy, inflation, public debt burden, and debt service record.

作者: Mechanic 时间: 2012-4-2 16:42

Which of the following factors least likely represents an economic risk that Standard and Poor's Corporation would consider in the rating of a sovereign debt credit?

A)	natural resource endowments.

B)	living standards.

C)	external security risks.

External security risk is a political risk factor, not an economic risk factor.

作者: Mechanic 时间: 2012-4-2 16:44

Which of the following factors least likely represents an economic risk that Standard and Poor's Corporation would consider in the rating of a sovereign debt credit?

A)	natural resource endowments.

B)	living standards.

C)	external security risks.

External security risk is a political risk factor, not an economic risk factor.

作者: Mechanic 时间: 2012-4-2 16:45

Does a national government have much or little control over its ability to generate enough currency to meet its local currency and foreign currency obligations?

A)	Much control over both currencies.

B)	Little control over either currencies.

C)	Much control over one currency only.

A national government has more control over its ability to raise funds for local currency debt if it is willing to raise taxes or print money. A government has much less control in its ability to raise funds for foreign currency debt since it must purchase the foreign currency and has little control of its exchange rate.

作者: Mechanic 时间: 2012-4-2 16:45

An analysis of the credit quality of the collateral is most important in assessing the creditworthiness of:

A)	a sovereign bond issue.

B)	an asset-backed securities issue.

C)	a corporate bond issue.

Analyzing the credit quality of the collateral is important in the issuance of asset-back securities.

作者: Mechanic 时间: 2012-4-2 16:45

Which of the following is least likely a factor used in assessing the credit quality of a national government's local currency debt?

A)	Income and economic structure.

B)	Monetary policy and inflation pressures.

C)	Balance of payments and structure of the external balance sheet.

作者: Mechanic 时间: 2012-4-2 16:46

A very similar analysis is required for which two types of debt?

A)	Corporate bonds and asset-backed securities.

B)	Municipal bonds and sovereign debt.

C)	Sovereign debt and corporate bonds.

The analysis of sovereign debt is actually very similar to that of corporate debt. Both are concerned with character, capacity, and capital as well as availability and the quality of financial reporting. Municipal bond analysis requires specialized analysis of rate covenants and priority-of-revenue claims.

作者: Mechanic 时间: 2012-4-2 16:46

An evaluation of the quality of the servicer is a key consideration for which type of credit?

A)	Municipal bonds.

B)	Corporate bonds.

C)	Asset-backed securities.

The quality of the seller/servicer is critical for the assessment of asset-backed securities.

作者: Mechanic 时间: 2012-4-2 16:47

The assessment of which of the following types of debt require that the analyst use only qualitative factors, only quantitative factors or both qualitative and quantitative factors?

A)	Corporate bonds - both; sovereign debt - both; municipal debt - quantitative.

B)	Corporate bonds - both; sovereign debt - qualitative; municipal debt - quantitative.

C)	Corporate bonds - both; sovereign debt - both; municipal debt - both.

Corporate, sovereign, and municipal debt all require quantitative and qualitative elements of analysis.

作者: esdlcd72 时间: 2012-6-30 14:59 标题: 冰峪庄园大米原浆酒可调制冰峪庄园大米原浆酒

“冰峪庄园”大米原浆酒的可调制性,冰峪庄园大米原浆酒可调制冰峪庄园大米原浆酒，是中国任何一款白酒都无法复制与模仿的。它可以作为基酒,冰峪庄园大米原浆酒健康卖点冰峪庄园大米原浆酒，调制出世界上任何一款洋酒或者鸡尾酒的口感口味,白酒加盟。或配以各种辅料,冰峪庄园大米原浆酒高质冰峪庄园大米原浆酒，随意调制饮用。
厂家网站：www点tmsv9

欢迎光临 CFA论坛 (http://forum.theanalystspace.com/)