aiwmi CCRA-L2 Exam Questions
Questions for the CCRA-L2 were updated on : Nov 21 ,2025
Page 1 out of 6. Viewing questions 1-15 out of 84
Question 1
__________Strategy consists of buying a bond with maturity longer than the investment horizon (for
investor)
or buying a long-maturity bond with short-term funding through repo (for speculator).
- A. Barbell, Ladder and Butterfly
- B. Yield Spread Anticipation
- C. Rate Anticipation with Maturity Mismatch
- D. Riding the yield curve
Answer:
D
Question 2
Provisioning Coverage Ratio (PCR) is essentially the ratio of provisioning to ______ and indicates the
extent
of funds a bank has kept aside to cover loan losses.
- A. total loan portfolio
- B. gross non-performing assets
- C. total assets
Answer:
B
Question 3
Step up upon feature will lead to
- A. no change as step is not linked to issuers rating
- B. positive basis because the bond holder is compensated
- C. negative basis given that the bondholder is not compensated
- D. Will lead to a change only if there is a linkage to the issuer’s rating
Answer:
B
Question 4
The _______ cycle is the length of time between the company’s outflow on raw materials and the
manufacturing expenses and the inflow of cash from the sale of goods.
- A. Cash flow mismatch
- B. Money
- C. Running
- D. Operating
Answer:
D
Question 5
Which of the following factor is considered while undertaking management evaluation?
- A. All of the other options
- B. Corporate Strategy
- C. Performance of group concerns
- D. Past track record
Answer:
D
Question 6
Short term rates are determined by____________
- A. All of the other options
- B. Liquidity position caused by seasonal demand supply for credit
- C. Foreign portfolio investment inflows and outflows
- D. Bunching of tax and government payments
Answer:
B
Question 7
Which of the following is false in case of credit enhancements?
- A. It reduces the default risk of the borrowing entity for the lender, thereby deteriorating the overall credit worthiness of the borrower
- B. Credit enhancement could be implicit or explicit
- C. Credit enhancement is a mechanism whereby external cash flows is extended by an entity which has a stringer credit profile, so that it benefits the fund raising entity
Answer:
A
Question 8
Which of the following is NOT a conceptual definition of credit risk on which credit models are
based?
- A. Default Mode Paradigm
- B. Value-at-Risk paradigm
- C. Mark-to-Market Paradigm
Answer:
B
Question 9
Statement 1: The Yields on the MBS PTCs are normally higher than the yields on the corporate bonds
of similar ratings.
Statement 2: The reason for difference in yields on the corporate bonds and similarly rated PTCs is on
account of the optionality in the PTC, the unfamiliarity of the structure and uncertainties in respect of
legal and structural issues.
Which of the above statements is correct?
- A. None of the statements
- B. Both the statements
- C. Only Statement 2 is correct
- D. Only Statement 1 is correct
Answer:
D
Question 10
Stand by letter of credits are typically taken as credit enhancement for___________
- A. Commercial Paper
- B. Long term Bond issues
- C. Long term debenture issues
- D. Bank debt
Answer:
D
Question 11
Bank A has an imaginary portfolio of USD 1000 Million distributed towards following four entities:
Bank A is stipulated to maintain a capital adequacy ratio of 11% on its risk weighted assets. It is being
stipulated that the ratings for all the four entities is expected to be downgraded by 1 notch each.
Estimate the amount of new capital required for Bank A?
- A. USD 93.5 Million
- B. USD 38.5 Million
- C. USD 55 Million
- D. USD 850 Million
Answer:
B
Question 12
Which of the following is not an importance of the sovereign rating?
A: To arrive at cost of lending to a country
B: To set lower floor for the rating of the corporate and banks of the countries on international scale.
C: For determining the risk levels for international investment portfolios
- A. Only A and C
- B. Only B
- C. Only A and B
- D. None of the three
Answer:
B
Question 13
In a weakening economy, which of the following is least accurate?
- A. Interest costs go up and create refunding risk for those who have bonds maturing which need to be rolled over.
- B. Interest costs go up and create rate risk for have bonds maturing which need to be rolled over.
- C. None of the other options.
- D. Interest costs go up and create funding risk for those who have borowing plans lined up.
Answer:
D
Question 14
Based on the Moody’s KMV model which of the following is not correct?
A: Growth variables are important for default analysis. rapid growth will lead to lower probability of
default and rapid decline will lead to higher probability of default.
B: Activity ratios are relevant for default analysis. A large stock of inventories relative to sales will
lead to a higher probability of default.
- A. Only Statement A is correct
- B. Both the statements are correct
- C. None of the statements is correct
- D. Only Statement B is correct
Answer:
D
Question 15
Awesome Mobile Ltd is a leading mobile seller who manufactures mobile phone under own brand
Awesome.
Which of the following is the biggest business risk for Awesome?
- A. Technology Risk
- B. Branding risk
- C. Raw material price risk
- D. Competition
Answer:
C