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LOS b: Identify, explain, and analyze the key components of credit analysis, including both the borrower and the instrument.
Q1. Which of the following is one of the four Cs of credit analysis?
A) Commitment.
B) Capacity.
C) Capital.
Q2. 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) Strategic direction.
C) Human resources policy.
Q3. Which of the following factors is part of the analysis of an issuer’s character?
A) Company structure.
B) Strategic direction.
C) Basic operating position.
Q4. Which of the following 4-C's of credit refers to the terms and conditions of the lending agreement?
A) Covenants.
B) Contracts.
C) Conditions.
Q5. Which of the following criteria assesses the ability of the issuer to repay its obligations?
A) Capacity.
B) Capital.
C) Commitment.
Q6. Which of the following is NOT one of the criteria used to conduct a credit examination?
A) Character.
B) Consideration.
C) Covenants.
Q7. All of the following are elements of the "4 C's" of credit analysis EXCEPT:
A) Coverage.
B) Capacity.
C) Character.
Q8. 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 terms and conditions of the loan agreement.
B) The integrity of management and its commitment toward the repayment of the loan.
C) The availability of cash flow and other assets to repay the loan.
Q9. 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 availability of cash flow and other assets required by a corporation to repay its obligations.
B) The integrity of management and their commitment toward repayment of the loan.
C) The terms and conditions of the loan agreement.
A) Affirmative covenants.
B) Third-party guarantees.
C) Material adverse change clause.
Q11. 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.
Q12. Which of the following factors is least likely part of the analysis of an issuer’s character?
A) Conservatism.
B) Succession planning.
C) Executive compensation and benefits structure.
Q13. 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) Contractual back-up facility.
C) Line of credit.
Q14. All of the following are part of the four C’s of credit that Moody’s and S& use to analyze credit quality EXCEPT:
A) capacity.
B) covenants.
C) category.
Q15. Which of the following focuses on analyzing the quality of management?
A) Capacity analysis.
B) Compensation analysis.
C) Character analysis.
Q16. Which of the following least likely represent sources of liquidity for a company?
A) Operating cash flows.
B) Investing cash outflows.
C) Back-up credit facilities.
Q17. 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.
Q18. Which of the following statements regarding the analysis of an issuer’s capacity to pay is FALSE?
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 "material adverse change clause" would weaken a back-up facility.
C) A noncontractual line of credit is viewed as a strong back-up facility. | 
发表于 2009-3-13 17:39
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