[ 2009 FRM Sample Exam ] Quantitative Analysis Q24 commitment, capacity, rating

lalamei

 

24. "The obligor's capacity to meet its financial commitment on the obligation is still strong." What is the rating of this issue if this statement is given out by S&?

A. AA

B. A

C. BBB

D. BB

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lalamei

 

Correct answer is Bfficeffice" />

A is incorrect.  AA-rated  The obligor's capacity to meet its financial commitment is very strong.

B is correct.  A-rated  The obligor's capacity to meet its financial commitment is still strong.

C is incorrect.  BBB-rated  Adverse economic or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

D is incorrect.  BB-rated  Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation.