CORPORATE CREDIT ANALYSIS APRIL 2022 PAST PAPER

MONDAY: 4 April 2022. Afternoon paper.                                                                                           Time Allowed: 3 hours.

Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.

QUESTION ONE

1.  Explain the term “sovereign claim”. (2 marks)

Identify six reasons that would make a sovereign to borrow. (6 marks)

2.Summarise four duties of a loan committee. (6 marks)

3.Assess six roles of the financial strategy of a company. (6 marks)

(Total: 20 marks)

QUESTION TWO

1. Summarise for differences between “working capital loans” and “term loans”. (8 marks)

2. Evaluate four risks that a bondholder is exposed to. (8 marks)

3. Outline four features of a limited liability company. (4 marks)

(Total: 20 marks)

QUESTION THREE

1. Propose four characteristics of a positive lending relationship. (4 marks)

2. Identify eight events that constitute default on credit obligations. (8 marks)

3. Examine four reasons why it is necessary to undertake credit risk analysis. (8 marks)

(Total: 20 marks)

QUESTION FOUR

1. Analyse three principles of sound lending. (6 marks)

2. Discuss three categories of country risk. (6 marks)

3. Describe four drivers of corporate cash flow. (8 marks)

(Total: 20 marks)

QUESTION FIVE

1. Discuss credit analysis, citing four categories of prospective borrowers. (8 marks)

2. Analyse three sources of industry risk. (6 marks)

3. Describe three objectives of a loan agreement. (6 marks)

(Total: 20 marks)

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