1
Q
Structural.models are
A
Based on balance sheet & endogenous in nature
2
Q
Reduced form models
A
Based on regression, does not explain when the default will occur , exogenous in nature
3
Q
Reduced for model uses what variables
A
Historical
4
Q
Positive sloped credit spread margins arise when
A
A issuer has low leverage , strong cfe & high npm
5
Q
Abs are valued via
A
Pf based apporach
6
Q
A spe helps investor for diversification & increases financing cost
A
True
False
7
Q
Tell the 4 exposures if fv 1000 , 20 coupon , dr 1 pcent
A
year 4 = 1000+20
year 3 =1000+20/1.01 +20
year 2= year 3 /1.01 +20
year 1 = year 2/1.01 +20
8
Q
Cva pv calci
A
Discount like 1 2 3 4 , factors top to bottom
