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Certified Credit Research Analyst
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Question: 76
Statement 1: The Yields on the MBS PTCs are normally higher than the yields on the corporate bonds of similar ratings. Statement 2: The reason for difference in yields on the corporate bonds and similarly rated PTCs is on account of the optionality in the PTC, the unfamiliarity of the structure and uncertainties in respect of legal and structural issues. Which of the above statements is correct?
None of the statements
Both the statements
Only Statement 2 is correct
Only Statement 1 is correct
Answer: D
Question: 77
Which of the following is NOT a conceptual definition of credit risk on which credit models are based?
Default Mode Paradigm
Value-at-Risk paradigm
Mark-to-Market Paradigm
Answer: B
Question: 78
Which of the following is false in case of credit enhancements?
It reduces the default risk of the borrowing entity for the lender, thereby deteriorating the overall credit worthiness of the borrower
Credit enhancement could be implicit or explicit
Credit enhancement is a mechanism whereby external cash flows is extended by an entity which has a stringer credit profile, so that it benefits the fund raising entity
Question: 79
Short term rates are determined by
All of the other options
Liquidity position caused by seasonal demand supply for credit
Foreign portfolio investment inflows and outflows
Bunching of tax and government payments
Answer: B
Question: 80
Which of the following factor is considered while undertaking management evaluation?
All of the other options
Corporate Strategy
Performance of group concerns
Past track record
Answer: D
Question: 81
The cycle is the length of time between the company's outflow on raw materials and the manufacturing expenses and the inflow of cash from the sale of goods.
Cash flow mismatch
Money
Running
Operating
Answer: D
Question: 82
Step up upon feature will lead to
no change as step is not linked to issuers rating
positive basis because the bond holder is compensated
negative basis given that the bondholder is not compensated
Answer: B
Question: 83
Provisioning Coverage Ratio (PCR) is essentially the ratio of provisioning to and indicates the extent of funds a bank has kept aside to cover loan losses.
total loan portfolio
gross non-performing assets
total assets
Answer: B
Question: 84
Strategy consists of buying a bond with maturity longer than the investment horizon (for investor) or buying a long-maturity bond with short-term funding through repo (for speculator).
Barbell, Ladder and Butterfly
Yield Spread Anticipation
Rate Anticipation with Maturity Mismatch
Riding the yield curve
Answer: D
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