22 Questions
Which factor is considered by practitioners when analyzing securities backed by general consumer/credit card loans?
Societal risks such as discriminatory lending
What is one limitation of quantifying ESG issues in structured credit analysis?
It may not help identify mispriced prepayment assumptions
What does qualitative analysis in structured credit analysis focus on?
Thorough due diligence of parties to the transaction
Which of the following is a potential impact of ESG factors on a company's book value and earnings?
Decrease in book value and earnings
Which factor may lead a company to decrease or increase its future capital expenditure?
ESG factors
How do practitioners adjust the beta or discount rate in company valuation models to reflect ESG factors?
They increase the beta/discount rate for companies considered to possess high ESG risk
Which approach is commonly used to analyze ESG issues in sovereign credit analysis?
Feeding ESG research and/or scores into the credit analysis of an issuer
What factors are typically considered in credit analysis for municipal bonds?
All of the above
How can chronic social and environmental problems affect the credit quality of municipal bonds?
All of the above
What additional ESG factors may be integrated into credit analysis for project revenue bonds?
All of the above
Which of the following aspects should be considered when analyzing ESG risks in fixed-income investing?
Issuer types and credit quality
What is the main approach used by practitioners when assessing the impact of ESG issues on investment decisions?
Using third-party ESG scores and traditional credit analysis
Which of the following is true about the impact of ESG issues on corporate bond prices and share prices?
The order of frequency of impact is the same
What do practitioners use materiality/sustainability frameworks and company ESG research for?
To identify material ESG issues
What factors do Equities and Fixed Income depend more strongly on?
Governance factors
What types of securities are included in the fixed-income market?
Securities backed by financial assets
Why are practitioners just starting to consider how to systematically integrate ESG factors into structured credit analysis?
Lack of available ESG data
What role does ESG analysis play in determining the true risk-adjusted credit profile of a securitization?
Evaluating the originator's reputation
According to the text, why is the adoption of ESG integration in sovereign debt less widespread compared to corporate bonds?
All of the above
What are some examples of ESG data sources used by sovereign debt investors?
All of the above
Why do practitioners believe that ESG integration is not applicable to sovereign debt?
ESG issues are less material for sovereign debt compared to shares and corporate bonds
Which type of issues more frequently affect sovereign debt prices according to the CFA-PRI survey?
Social issues
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