Examen 1. Etapa 3 Fixed Income

The process by which rating agencies move the rating of a specific issue above or below the issuer’s rating is most correctly called:

An issuer credit rating typically applies to a company’s:

A bond has an exposure of $10,000,000, a probability of default (PD) of 3%, and a loss given default (LGD) of 60%. The expected loss is closest to:

As a company’s financial condition deteriorates, which of the following is most likely to happen first?

The credit risk of a bond is most correctly composed of:

In sovereign credit analysis, the two pillars emphasized by the CFA curriculum are most correctly:

Compared with a general obligation (GO) bond, a municipal revenue bond is most correctly characterized as being backed by:

A sovereign that issues debt in its OWN currency most likely has better credit quality on that debt because it:

The ‘four Cs’ of corporate credit analysis are most correctly:

A company has total debt of $500 million and EBITDA of $125 million. Its debt/EBITDA leverage ratio is closest to:

A company has EBIT of $240 million and interest expense of $60 million. Its interest coverage ratio (EBIT/interest) is closest to:

For two bonds from the same issuer with equal probability of default, the senior secured bond relative to the subordinated bond will most likely have:

If the originator (seller of the collateral) of a securitization goes bankrupt, the investors in the bonds issued by the SPE most likely:

A benefit of securitization is most correctly:

In a securitization with tranching, subordination means that the senior tranche most likely:

Overcollateralization in an ABS is an example of:

Compared with an ABS backed by auto loans, an ABS backed by credit card receivables is most likely characterized by collateral that is:

Compared with the weighted average coupon (WAC) of the underlying mortgage pool, the pass-through rate of a mortgage pass-through is most likely:

For the investor in a mortgage pass-through, a DECLINE in interest rates most likely generates:

Compared with an agency MBS, a non-agency (private-label) MBS most likely: