Credit Risk

What are the two primary components that comprise credit risk?

Which term describes the probability that a borrower fails to pay interest or repay principal when due?

How is Expected Loss calculated in the context of credit risk?

If the recovery rate of a bond is 40 percent, what is the loss severity?

Which risk refers to the possibility that a bond's spread will widen due to the issuer becoming less creditworthy?

Which of the '4 Cs' of credit analysis refers to the ability of the borrower to repay its debt obligations?

In credit analysis, what does 'Collateral' represent?

Which component of the '4 Cs' includes affirmative and negative provisions in the bond indenture?

Which factor is considered a 'Top-Down' factor in credit analysis?

What is the primary source of cash flow generation for a sovereign entity?

For a corporate borrower, what is considered a secondary source of liquidity for repayment?

Which formula correctly represents the calculation of Expected Loss (EL)?

If the Expected Exposure (EE) is 1,000,000 and the Recovery Rate (RR) is 60 percent, what is the Loss Given Default (LGD) in monetary terms?

Why might credit ratings lag market pricing?

How do economic cycles generally affect credit spreads?

Which factor influences the bid-ask spread of a bond?

What is 'sovereign immunity'?

Which of the following is a qualitative factor in sovereign creditworthiness?

Which ratio is used to measure a sovereign's fiscal strength?

What does the ratio 'Foreign Exchange Reserves to GDP' measure for a sovereign?

What distinguishes General Obligation (GO) bonds from Revenue bonds?

Which ratio is a key measure for analyzing Revenue Bonds?

What are 'Supranational Issuers'?

In corporate credit analysis, which 'C' includes the assessment of management's track record and strategy?

Which ratio measures a corporation's leverage?

What does the Interest Coverage Ratio (EBIT to Interest Expense) indicate?

Which type of debt has the highest priority of claims?

What does the term 'pari passu' mean in the context of debt seniority?

What is 'notching' in credit ratings?

What is 'Structural Subordination'?

Which industry sector factor is part of a corporate credit analysis?

What is 'Loss Given Default' (LGD)?

Which risk is defined as the 'Risk of receiving less than market value' when selling a bond?

Affirmative covenants typically require the issuer to:

Under the 'Bottom-Up' factors of credit analysis, which element is assessed?

Which factor generally poses a significant credit risk for a corporate borrower?

What does 'Event Risk' refer to in the context of credit ratings?

In a sovereign credit analysis, 'Fiscal Discipline' is a component of:

Which debt ratio indicates the 'Debt Affordability' for a sovereign?

What represents a 'Quasi-governmental' issuer?

Which financial ratio helps assess a corporate issuer's profitability?

In the event of default, recovery rates are influenced by:

What does a 'Corporate Family Rating' (CFR) apply to?

Corporate Credit Ratings (CCR) or Issue Ratings are based on:

The risk that an issuer's 'spread' will widen due to a credit downgrade is called:

Which factor is assessed under 'Economic Diversification' for a sovereign?

What does the 'Retained Cash Flow (RCF) to Net Debt' ratio measure?

If a bond's spread widens, what is the direct impact on its price (holding yields constant)?

Which sovereign factor involves 'Access to External Funding'?

Why is 'notching' typically applied to subordinated debt?