Cases in CF _ 2023 Fall - 3

The term "Fallen Angels" refers to companies or bonds that were once considered investment-grade but have seen a downgrade to junk or speculative-grade status.

• True

• False

What role do credit rating agencies play in the downgrade of Fallen Angel Bonds?

• They increase market volatility

• They assess industry-specific challenges

• They reassess the creditworthiness of issuers

• They encourage strategic expansion

How did the downgrade of General Electric (GE) impact the company?

• GE faced higher borrowing costs

• GE experienced increased demand for its bonds

• GE's stock prices rose

• GE initiated asset purchases

What is the advantages of Bridge loans compared with Traditional loans?

• Quick Access to capital, Higher Interest Rates, Short Repayment Periods

• Shorter Processing Times, Lower Interest Rates, Shorter Terms

• Quick Access to capital, Shorter Processing Times, Flexibility in repayment.

On what dimensions do lenders typically evaluate a borrower's qualifications in the presentation?

• Credit Score, Collateral, Financial Stability, Loan-to-Value Ratio

• Credit Score, Collateral, Marital status, Loan-to-Value Ratio

• Collateral, Financial Stability, Use of the loan, Loan-to-Value Ratio

Which of the following indicators is lower and better (More conducive to passing the assessment of a bridge loan)?

• Credit Score

• Loan-to-Value Ratio

• Profit Margin

What is the primary purpose of golden parachutes, according to the provided information?

• To increase conflicts of interest

• To reduce the company's bottom line profitability

• To attract and retain top talent

• To discourage mergers and acquisitions

Why might golden parachutes be criticized, especially in the context of mergers?

• They may not be effective in preventing hostile takeovers.

• They make it difficult for executives to find new jobs.

• They reduce the company's overall profitability.

• They lead to a moral hazard problem among executives.

How do golden parachutes impact investor trust in the financial market?

• They enhance market trust by ensuring executives are well-compensated.

• They have no effect on investor trust.

• They may create doubt about how well companies are being run.

• They lead to increased confidence in the overall market.

The “Einhorn effect” is

• repayment of outstanding convertible debt and creating a cushion with respect to certain covenants in securitization vehicles.

• the sharp drop in a publicly traded company's share price that often occurs immediately after Einhorn himself publicly shorts.

• trend of implementing thorough due diligence before engaging in any financial transactions.

• the sharp raise in a publicly traded company's share price that often occurs immediately after Einhorn himself publicly longs.