LOS f: Identify, explain, and interpret the typical elements of the corporate structure and debt structure of a high-yield issuer and the impact of these elements on the risk position of the lender.
Q1. All of the following are characteristics of bank debt EXCEPT:
A) Bank debt tends to have a principal value that is indexed to the rate of inflation.
B) Banks have a high priority over the assets of the firm.
C) Bank debt is usually floating rate debt.
Q2. High yield debt structures will least likely have which of the following characteristics?
A) Bank debt.
B) Well collateralized senior debt.
C) Payment-in-kind bonds.
Q3. Which of the following statements is most accurate regarding the issuance of high yield debt under a holding company structure?
A) The analysis of subsidiary financial ratios and performance is unimportant because the debt repayment is made from the parent's cash flows.
B) Debt is borrowed at the parent company level and funds to pay the obligation are obtained from operating subsidiaries.
C) Debt is borrowed at the subsidiary level and funds to pay the obligation are obtained from the parent company.
Q4. 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.
Q5. 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.
Q6. 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) Bridge loans.
C) Reset notes.
Q7. 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.
Q8. 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.
Q9. When analyzing the credit risk of the holding company, it is critical for the analyst to focus on all of the following EXCEPT:
A) ratio analysis of the parent company.
B) the cash flows generated by the subsidiary.
C) how cash flows move between subsidiaries.
Q10. Which of the following does NOT represent special analyst considerations for high-yield corporate bonds?
A) Covenant analysis.
B) Corporate structure analysis.
C) Cost of capital analysis.
Q11. Which of the following statements regarding loan covenants is least accurate?
A) 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.
B) Banks have a higher priority claim over a firm's assets.
C) Loan covenant analysis is seldom used in the analysis of high-yield issues.
[此贴子已经被作者于2009-3-16 17:00:27编辑过] | 
发表于 2009-3-14 18:05
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