AIWMI Exam CCRA-L2 Topic 9 Question 86 Discussion

Actual exam question for AIWMI's CCRA-L2 exam

Question #: 86
Topic #: 9

The following information pertains to bonds:

Further following information is available about a particular bond 'Bond F'

There is a 10.25% risky bond with a maturity of 2.25% year(s) its current price is INR105.31, which corresponds to YTM of 9.22%. The following are the benchmark YTMs.

From the time January 2013 to April 2013, what can you predict about the market conditions, assuming the GSec has not changed?

AThere has been credit spread compression, which means the spreads have declines, which can be lead indicator of oncoming economy stress.

BThere has been widening of credit spread, which means the spreads have increased, which can be lead indicator of oncoming economy stress.

CThere has been widening of credit spread, which means the spreads have increased, which can be lead indicator of oncoming economy stress.

DThere has been credit spread compression, which means the spreads have declines, which can be lead indicator of oncoming economy boom.

Show Suggested Answer

Suggested Answer: B

by Ardella at Apr 28, 2024, 02:34 PM

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Billy

3 months ago

I'm feeling lucky today, so I'm going to go with option D. Who needs logic when you can just rely on pure chance? Plus, if I'm wrong, I can always blame the market gods for not being on my side. Shake that magic 8-ball and let's see what happens!

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Felicitas

1 months ago

Let's trust in luck and go with option D together! Who knows what the market gods have in store for us.

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Chantell

2 months ago

I'm not sure about this one, maybe option B is the way to go.

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Adrianna

2 months ago

I'm feeling adventurous, so I'll choose option D like you!

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Shannon

2 months ago

I think I'll go with option A. It seems like a safer choice.

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Stevie

3 months ago

Hmm, let's see. The bond's YTM has increased, which means the price has decreased. That's typically a sign of increasing credit risk, so option C is the way to go. Time to break out the crystal ball and start predicting the next financial crisis!

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Nancey

2 months ago

Looks like we're all on the same page with option C. It's fascinating how bond prices can reflect changes in the economy.

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Harley

2 months ago

It's always interesting to see how market conditions can be predicted based on bond performance. Option C does make sense in this scenario.

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Willow

2 months ago

I agree, the increase in YTM does indicate higher credit risk. Option C seems like the most logical choice.

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Reed

4 months ago

Ah, the good old bond market puzzle. I'm going to go with option C, as the widening of the credit spread is a sign of potential economic trouble on the horizon. Time to start stockpiling canned goods and practicing my 'I told you so' dance moves.

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Telma

2 months ago

Devora: Definitely. Time to brace ourselves for potential economic challenges.

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Devora

2 months ago

User 2: Yeah, I agree. It's a warning sign for sure. Better be prepared.

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Jeanice

3 months ago

User 1: I think option C is the right choice. The widening of credit spread usually indicates economic trouble.

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Brynn

4 months ago

The question is asking about the market conditions based on the changes in the credit spread for a particular bond. Option C seems to be the correct answer, as the information provided indicates that the credit spread has widened, which can be a lead indicator of an upcoming economic stress.

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