Podcast
Questions and Answers
What is the standard deviation for the first loan?
What is the standard deviation for the first loan?
- 28 (correct)
- 42
- 23.43
- 15
What is the average return expected on the first loan?
What is the average return expected on the first loan?
- 15% (correct)
- 18.2%
- 21%
- 17.4%
What is the weightage of Loan 2 in the portfolio?
What is the weightage of Loan 2 in the portfolio?
- 30%
- 40% (correct)
- 50%
- 60%
What happens to the risk when Loan 3 is added to the portfolio?
What happens to the risk when Loan 3 is added to the portfolio?
What is the average return on the portfolio after adding Loan 3?
What is the average return on the portfolio after adding Loan 3?
What is the lesson learned from diversifying the portfolio?
What is the lesson learned from diversifying the portfolio?
Why do the β values in Altman's Z-Score need to be re-computed periodically?
Why do the β values in Altman's Z-Score need to be re-computed periodically?
What is a limitation of Altman's Z-Score model?
What is a limitation of Altman's Z-Score model?
What is not included in the models built using accounting ratios?
What is not included in the models built using accounting ratios?
What concept is the Moody's KMV Model based on?
What concept is the Moody's KMV Model based on?
What happens when the effective cash flow is less than the debt repayment obligations?
What happens when the effective cash flow is less than the debt repayment obligations?
What is the maximum possible loss to the equity shareholders in the scenario where the firm defaults on its debt repayment?
What is the maximum possible loss to the equity shareholders in the scenario where the firm defaults on its debt repayment?
What is the primary purpose of credit risk assessment models?
What is the primary purpose of credit risk assessment models?
What statistical method is used to determine the weights or β values associated with each variable?
What statistical method is used to determine the weights or β values associated with each variable?
What is the equation used to arrive at the Z-Score for a particular firm?
What is the equation used to arrive at the Z-Score for a particular firm?
What is the limitation of Altman's Z-Score?
What is the limitation of Altman's Z-Score?
What is the data source used to determine the weights or β values?
What is the data source used to determine the weights or β values?
What is the limitation of using past data in credit risk assessment models?
What is the limitation of using past data in credit risk assessment models?
