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.
Following are the relevance of Industry Analysis:
Statement 1: Evaluating Industry risk is the first and foremost step for top down approach of analysis.
Statement 2: Industry Analysis is relevant for analyzing the industry life cycle, which is highly important from
the perspective of an investor or lender.
State which is/are correct?
Scott is a credit analyst with one of the credit rating agencies in Indi
a. He was looking in Oil and Gas Industry companies and has presented brief financials for following 4 entities:
Two credit analysts are discussing the DM-approach to credit risk modeling. They make the following statements:
Analyst A: A portfolio's standard deviation of credit losses can be determined by considering the standard deviation of credit losses of individual exposures in the portfolio and summing them all up.
Analyst B: I do not fully agree with that. Apart from individual standard deviations, one also needs to consider the correlation of the exposure with the rest of the portfolio so as to account for diversification effects. Higher correlations among credit exposures will lead to higher standard deviation of the overall portfolio.
The most important metric for a bank is the Net Interest Income (NII) which is the difference
between____income and____expense.
