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Certified Credit Research Analyst Level 2 Question and Answers

Certified Credit Research Analyst Level 2

Last Update May 18, 2024
Total Questions : 84

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Questions 1

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

Options:

A.  

Capacity

B.  

Capital

C.  

Covenants

D.  

Conditions

Discussion 0
Questions 2

Which of the following statement is (are) correct?

Statement 1: Industry analysis is the first and foremost step in the bottom up approach of analysis.

Statement 2: Industry analysis would enable an analyst to figure out the relative positions of various market players and thereby make informed investment decisions.

Options:

A.  

Both are incorrect

B.  

Only Statement 1 is correct

C.  

Only Statement 2 is correct

D.  

Both are correct

Discussion 0
Questions 3

Which of the following factor is considered while undertaking management evaluation?

Options:

A.  

All of the other options

B.  

Corporate Strategy

C.  

Performance of group concerns

D.  

Past track record

Discussion 0
Questions 4

The extension of a guarantee by company A to company B can lower the rating of___________

Options:

A.  

Company B

B.  

Both A and B

C.  

Guarantee has no impact on ratings of company A and company B

D.  

Company A

Discussion 0
Questions 5

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.

Options:

A.  

Cash flow mismatch

B.  

Money

C.  

Running

D.  

Operating

Discussion 0
Questions 6

Based on the Moody’s KMV model which of the following is not correct?

Options:

A.  

Growth variables are important for default analysis. rapid growth will lead to lower probability of default and rapid decline will lead to higher probability of default.

B.  

Activity ratios are relevant for default analysis. A large stock of inventories relative to sales will lead to a higher probability of default.

C.  

Only Statement A is correct

D.  

Both the statements are correct

E.  

None of the statements is correct

F.  

Only Statement B is correct

Discussion 0
Questions 7

Step up upon feature will lead to

Options:

A.  

no change as step is not linked to issuers rating

B.  

positive basis because the bond holder is compensated

C.  

negative basis given that the bondholder is not compensated

D.  

Will lead to a change only if there is a linkage to the issuer’s rating

Discussion 0
Questions 8

A holder of which of the following types of bonds is least likely to suffer from rising interest rates?

Options:

A.  

Floating rate bonds

B.  

Fixed rate bond

C.  

Zero-coupon bonds

Discussion 0
Questions 9

Following is information related banks:

Auckland Ltd is a public sector bank operating with about 120 branches across India. The bank has been in business since 1971 and has about 40% branches in rural areas and about 75% of all branches are in

Western India. On the basis of the size, Auckland Ltd will be ranked at number 31 amongst 40 banks in India.

Although top management has appointment period of 5 years, generally they retire on ach sieving age of 60 years with an average tenure of only 2 years at the top job.

Profit and Loss Account

Balance Sheet

The rating wise break-up of assets for FY11 is as follows:

The core spreads for FY13 as compared to FY12 have:

Options:

A.  

Expanded by 136 bps

B.  

Contracted by 327 bps

C.  

Contracted by 136 bps

D.  

Expanded by 191 bps

Discussion 0
Questions 10

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.

Options:

A.  

HHI = 500; High Concentration

B.  

HHI = 8000; low Concentration

C.  

HHI = 8000; High Concentration

D.  

HHI = 500; Low Concentration

Discussion 0
Questions 11

The following information pertains to bonds:

Further following information is available about a particular bond ‘Bond F’

There is a 10.25% risky bond with a maturity of 2.25% year(s) its current price is INR105.31, which corresponds to YTM of 9.22%. The following are the benchmark YTMs.

Assuming the G-Sec has not changed from the time January 2013 to April 2013, what can you predict about the changes bond price and change in issues borrowing rates:

Options:

A.  

Decrease and Increase

B.  

Increase and Increase

C.  

Decrease and Decrease

D.  

Increase and Decrease

Discussion 0
Questions 12

Based on the common size statement analysis which of the following statement regarding employee cost is correct?

Options:

A.  

The employee cost is expected to contribute 8% to decrease in PAT in FY15

B.  

The employee cost is expected to contribute 7% to decrease in PAT in FY15

C.  

The employee cost is expected to contribute 6% to decrease in PAT in FY15

D.  

The employee cost is expected to contribute 5% to decrease in PAT in FY15

Discussion 0