Pass the AIWMI CCRA CCRA-L2 Questions and answers with CertsForce

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Questions # 11:

Awesome Mobile Ltd is a leading mobile seller who manufactures mobile phone under own brand Awesome.

Which of the following is the biggest business risk for Awesome?

Options:

A.

Technology Risk


B.

Branding risk


C.

Raw material price risk


D.

Competition


Expert Solution
Questions # 12:

In a weakening economy, which of the following is least accurate?

Options:

A.

Interest costs go up and create refunding risk for those who have bonds maturing which need to be rolled over.


B.

Interest costs go up and create rate risk for have bonds maturing which need to be rolled over.


C.

None of the other options.


D.

Interest costs go up and create funding risk for those who have borowing plans lined up.


Expert Solution
Questions # 13:

During FY13, Small Bazar, a leading retail company has sold three of its prime properties for a sum of USD 24 Million. The same had a carrying value of USD 30 Million.

Analyst had considered the same as operating income and considered it to be part of operating expenses.

However, she realized her mistake and recorded the loss as non-operating loss. Which of the following ratio will not change despite the correction?

A) EBITDA Margins

B) Interest Coverage

C) PAT Margins

D) Gross Profit Margin

Options:

A.

B, C & D


B.

A, B & C


C.

B, C


D.

All Ratios will change


Expert Solution
Questions # 14:

Butterfly strategy is a combination of

Options:

A.

Ladder and Barbell on the same market sides


B.

Barbell and Bullet on the opposite market sides


C.

Barbell and Bullet on the same market sides


D.

Ladder and barbell on the opposite market sides


Expert Solution
Questions # 15:

The following information pertains to bonds:

Question # 15

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 ccorresponds to YTM of 9.22%. The following are the benchmark YTMs.

Question # 15

Assume that the general market rates have increased. An issuer, Revolution Ltd has plans to roll over its existing commercial paper and forth coming reset dates for its floating rate bonds are very near. Which of the following ratios for revolution will get impacted?

Options:

A.

Interest Coverage and Return on assets


B.

DSCR, and Return on Assets


C.

DSCR, Interest Coverage and Return on assets


D.

DSCR and interest Coverage


Expert Solution
Questions # 16:

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


Expert Solution
Questions # 17:

If you yield curve is humped and the medium rates drop, what will happen to the yield curve?

Options:

A.

It will move from negative to positive


B.

It will shift up in a uniform fashion


C.

It will become steeper


D.

It will flatten


Expert Solution
Questions # 18:

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

Options:

A.

Annual Report


B.

Reports issued by brokerages on companies


C.

Analyst Presentations


D.

Concall transcripts


Expert Solution
Questions # 19:

“Following four entities operate in the Indian IT and BPO space. They all are into same segment of providing off-shore analytical services. They all operate on the labour cost-arbitrage in India and the countries of their clients. Following information pertains for the year ended March 31, 2013.

Question # 19

Question # 19

The year FY13, was typically a good year for Indian IT companies. For FY14, the economic analysts have given following predictions about the IT Industry:

A) It is expected that INR will appreciate sharply against other USD.

B) Given high inflation and attrition in IT Industry in India, the wages of IT sector employees will increase more sharply than Inflation and general wage rise in country.

C) US Congress will be passing a bill which restricts the outsourcing to third world countries like India.

While analyzing the four entities, you come across following findings related to Glowing:

Glowing is promoted by Mr.M R Bhutta, who has earlier promoted two other business ventures, He started with ABC Entertainment Ltd in 1996 and was promoter and MD of the company. ABC was a listed entity and

its share price had sharp movements at the time of stock market scam in late 1990s. In 1999, Mr.Bhutta sold his entire stake and resigned from the post of MD. The stock price declined by about 90% in coming days and has never recovered. Later on in 2003, Mr.Bhutta again promoted a new business, Klear Publications Ltd (KCL) an in the business of magazine publication. The entity had come out with a successful IPO and raised money from public. Thereafter it ran into troubles and reported losses. In 2009, Mr.Bhutta went on to exit this business as well by selling stake to other promoter(s). There have been reports in both instances with allegations that promoters have siphoned off money from listed entities to other group entities, however, nothing has been proved in any court.”

Which of the following risks do not exist for Indian IT industry?

Options:

A.

Raw material price risk, Exchange rate Risk


B.

Interest rate risk, Skilled Manpower Risk


C.

Exchange Rate Risk, Interest rate risk


D.

Domestic and international regulatory risk, technological risk


Expert Solution
Questions # 20:

Under an advance factoring contract, following flow of money takes place:

Options:

A.

Factor pays a percentage of the invoice face value to the seller at the time of sale


B.

The remainder of the purchase price is held by factor until the payment by the account debtor is made.


C.

The cost associated with the transaction is paid upfront by the seller to the factoring agent.


D.

Only B


E.

A, B and C


F.

Only C


G.

Only A and B


Expert Solution
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