{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

FIN_353--Final--Spring_2008

FIN_353--Final--Spring_2008 - FIN 353Spring 2008 Instructor...

Info icon This preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
FIN 353—Spring 2008 Instructor: Deniz KEBABCI True/False Questions 1. The five Cs of credit are financial capacity, collateral, conditions, connections with the bank and capital. Answer: False Page: 563 Level: Medium 2. Credit analysis of a mid-market corporate borrower differs from the analysis of a small business in that the analysis of the mid-market borrower is more focused on the business itself and less on the business owners. Answer: True Page: 562 Level: Medium 3. Asset management ratios are used in credit analysis to help understand the borrower's ability to generate sales from the amount invested in some asset category. Answer: True Page: 566-567 Level: Medium 4.A spot contract is an immediate delivery versus payment contract. Answer: True Page: 630 Level: Easy 5.Gains and losses on a futures contract must be recognized daily. Answer: True Page: 630 Level: Easy 6. A forward hedge can be used to reduce the risk associated with an expected change in interest rates, but the forward hedge cannot be used to hedge the risk associated with an unexpected change in interest rates. Answer: False Page: 631-632 Level: Medium
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
7. A macro hedge is a hedge of a particular asset or liability exposure to a change in a macroeconomic variable. Answer: False Page: 632 Level: Medium 8. Swaps are usually the best hedging tool to use to hedge long term risks of four or five years or more. Answer: True Page: 648 Level: Medium 9.A loan sold with recourse generates a contingent liability for the selling bank. Answer: True Page: 657 Level: Easy 10. Vulture funds specialize in buying distressed loans. Answer: True Page: 660 Level: Easy Multiple Choice Questions 1. Which one of the following is usually the better predictor of default? A) Standard and Poor's credit rating B) Moody's credit rating C) Altman Z-score D) KMV's EDF E) All of the above are equally effective at predicting default Answer: D Page: 572 Level: Medium
Image of page 2
2. A corporate loan applicant has cash of $30, receivables of $20 and inventory of $50. The applicant also has current debts of $50. If the bank's policy requires a current ratio of 2 or better and an acid test ratio of 1.5 or better would the applicant receive the loan? Use the following to answer questions 3-5:
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern