AIWMI CCRA CCRA Questions & Answers

• Question 31:

  A coupon bond is trading at 110% of the USD 1000 par value. If the last interest payment was made one month ago and the coupon rate is 12%, the accrued interest on this bond is_______

  A. 110

  B. 100

  C. 120

  D. 10

  Correct Answer: D

  Reference: http://www.faculty.umassd.edu/xtras/catls/resources/binarydoc/2288.pdf

• Question 32:

  Mr. A shares details of two bonds as follows: Determine the interpolated spread for Bond X and Bond Y?

  

  

  A. Bond X: 80 bps Bond Y: Negative

  B. Bond X: 35 bps Bond Y: 5 bps

  C. Bond X: 65 bps Bond Y: Nil

  D. Bond X: 20 bps Bond Y: 20 bps

  Correct Answer: B

• Question 33:

  Which of the following are types of bank guarantee?

  A. Deferred and Term

  B. Financial and Performance

  C. Usance and Sight

  Correct Answer: B

  Reference https://www.hdfcbank.com/sme/trade-services/letters-of-credit-and-bank-guarantees

• Question 34:

  Which of the following shall not be used as a source of information for the credit risk assessment?

  A. Annual Report

  B. Reports issued by brokerages on companies

  C. Analyst Presentations

  D. Concall transcripts

  Correct Answer: A

• Question 35:

  Risk in CDS price is reflective of

  A. increase in probability of default

  B. increase in interest rates

  C. decrease in probability of default

  D. increase in recovery rates

  Correct Answer: A

• Question 36:

  Which of the following is a factor considered while evaluating resources profile for rating of bank?

  A. Size and growth of deposits

  B. All of the three

  C. Deposit composition and stickiness

  D. Geographic distribution of deposits

  Correct Answer: B

• Question 37:

  Z spreads in Callable bonds include:

  A. Does not include premium for credit risk and call option price for prepayment risk.

  B. Premium for credit risk and call option price for prepayment risk in included.

  C. Premium for credit risk is only included.

  D. Premium for call option price for prepayment risk os only included.

  Correct Answer: B

  Reference: https://books.google.com.pk/books?id=WTvNAgAAQBAJandpg=PA224andlpg=PA224anddq=credit +Z+spreads+in+Callable+bonds+include+Premium+for+credit+risk+and+call+option+price+for +prepayment+risk+in +includedandsource=blandots=cdWVJiWQSCandsig=d9Y2vg5dyIZIrlBT7tmKRihUg2Mandhl=enandsa=Xandved=2ahU KEwiUqN2I_93eAhXMA8AKHSb1B7gQ6AEwCXoECAcQAQ#v=onepageandq=credit%20Z%20spreads% 20in%20Callable%20bonds% 20include%20Premium%20for%20credit%20risk%20and%20call%20option %20price%20for%20prepayment%20risk%20in%20includedandf=false

• Question 38:

  In an industry there are only 20 firms and each of them has equal share. Compute Herfindahl Hirschman Index and state the level of concentration in the industry.

  A. HHI = 500; High Concentration

  B. HHI = 8000; low Concentration

  C. HHI = 8000; High Concentration

  D. HHI = 500; Low Concentration

  Correct Answer: D

  Reference: https://www.investopedia.com/terms/h/hhi.asp

• Question 39:

  Which of the following is not one of the C in the 5 C Model?

  A. Capacity

  B. Capital

  C. Covenants

  D. Conditions

  Correct Answer: C

  Reference: https://www.investopedia.com/terms/f/five-c-credit.asp

• Question 40:

  Change in priority ranking of reference obligations is:

  A. Obligation acceleration

  B. Obligation default

  C. Restructuring

  D. Repudiation

  Correct Answer: C

  Reference: https://books.google.com.pk/books?id=NDvNAgAAQBAJandpg=PA279andlpg=PA279anddq=credit +Change+in+priority+ranking+of+reference+obligations +isandsource=blandots=L0YrHy6KrWandsig=NZErE0eK_DnEL1UOYW3y7vZ2ogandhl=enandsa=Xandved=2ahUKEwi38JF_t3eAhXHAsAKHSKIBE4Q6AEwAHoECAkQAQ#v=onepageandq=credit%20Change%20in%20priority% 20ranking%20of%20reference%20obligations%20isandf=false