credit analysis topic 1

Credit analysis is a type of financial analysis that an investor or bond portfolio manager performs on companies, governments, municipalities, or any other debt-issuing entities to measure the issuer's ability to meet its debt obligations. Credit analysis seeks to identify the appropriate level of default risk associated with investing in that particular entity's debt instruments.

• yes

• no

Listed below are principle of GOOD lending EXCEPT

• Safety of Loan

• Marketability

• Suitability of Loan Purposes

• Profitability

Quality of collateral

• Stable in price

• Marketability

• Durability

• Perishable

-General law of the land-cannot lend for unlawful activity

-Macroeconomics factors-general conditions of the economics

-Industry specific factors

Listed here are the

• INTERNAL factors

• EXTERNAL factors

Any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives.

• Financial Market

• Derivative market

• Black Market

The market through which companies and governments issue debt to investors, such as investment-grade bonds, junk bonds and short-term commercial paper.

• Credit market

• Debt market

Indirect Finance referring to lender loans to Financial Intermediary, who then loans to borrowers.

• Yes

• No

Default risk occurred when bond holders fails to make a required coupon or face value payment.

• True

• False

A condition that occurs when one party to a transaction has more information about the good than does the other

• Asymmetric Information

• Moral Hazard

Related to information about a business before a bank makes a loan

• Adverse Selection

• Moral Hazard