CORPORATE CREDIT ANALYSIS AUGUST 2023 PAST PAPER

TUESDAY: 22 August 2023. 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. Examine FOUR advantages of loan structuring as a tool to minimise credit risk. (8 marks)

2.  Explain the following terms as used in corporate credit analysis:

Stress testing. (2 marks)

Scenario analysis. (2 marks)

3. Discuss FOUR benefits of Porter’s five forces model. (8 marks)

(Total: 20 marks)

 

QUESTION TWO

1. State FOUR limitations of using guarantees for credit enhancement. (4 marks)

2. List FOUR advantages and FOUR disadvantages of debt securitisation. (8 marks)

3. Describe FOUR factors considered when lending to conglomerates. (8 marks)

(Total: 20 marks)

 

QUESTION THREE

1. Describe the term “lending philosophy”. (2 marks)

Outline FOUR components of lending philosophy. (4 marks)

2. Enumerate SIX causes of loan default. (6 marks)

3. Discuss FOUR applications of corporate business strategy in credit risk management. (8 marks)

(Total: 20 marks)

 

QUESTION FOUR

1. State FOUR differences between a “loan” and a “bond”. (4 marks)

2. Discuss FOUR effects of a country’s regulatory framework on corporate credit risk. (8 marks)

3. Explain FOUR roles of lending institution’s Boards in corporate governance. (8 marks)

(Total: 20 marks)

 

QUESTION FIVE

1. State FOUR categories of credit analysis. (4 marks)

2. Discuss FOUR types of commercial papers. (8 marks)

3. Analyse FOUR factors that could trigger systemic risk within a company’s environment of operation. (8 marks)

(Total: 20 marks)

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