A Pragmatist’s Guide to Leveraged Finance: Credit Analysis for Bonds and Bank Debt

Answers

Chapter 2

1. C

2. D

3. C (9% – 3% = 6% or 600 bp)

4. B ($2,000,000 × 0.98)

5. C ($1,000,000 × 1.025). 90 days is 25% of 360, so the bond seller gets 25% of the coupon.

Chapter 7

1. A

2. D

3. B

4. C

Chapter 8

1. C

2. B

3. C

4. True, because yield-to-worst factors in the call price.

5. B. The amount on the balance sheet equals the face amount times the accreted value, or $2,000,000 × .60.

Chapter 9

1. Interest, taxes, depreciation, and amortization

2. C

3. A

4. $100 ($100 + $25 – $30 – $5 + $10)

5. C

5. $660 ($760 – $100)

Chapter 10

1. B

2. B

3. Company Alpha (10/6) > (6/4)

4. It shows how much cash flow from operations is available to repay debt.

5. B

Chapter 11

1. 29.4% (750 / 2,550)

2. General and administrative expenses are usually ...