AIWMI Exam CCRA-L2 Topic 3 Question 90 Discussion

Actual exam question for AIWMI's CCRA-L2 exam

Question #: 90
Topic #: 3

[All CCRA-L2 Questions]

Step up upon feature will lead to

Ano change as step is not linked to issuers rating

Bpositive basis because the bond holder is compensated

Cnegative basis given that the bondholder is not compensated

DWill lead to a change only if there is a linkage to the issuer's rating

Show Suggested Answer

Suggested Answer: B

by Leonie at Jun 23, 2024, 07:45 PM

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Sophia

5 months ago

Hmm, the step-up feature sounds like a fancy way for the issuer to say 'We might raise your rates later.' I'll go with D to avoid getting stepped on.

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Herminia

3 months ago

No, the step is not linked to the issuer's rating, so it won't lead to any change.

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Thea

4 months ago

But wouldn't the bondholder be compensated if there's a step-up?

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Celia

4 months ago

I agree, I'll go with option D to avoid any surprises.

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Jacquelyne

4 months ago

I think the step-up feature is just a way for the issuer to increase rates later.

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Sylvia

5 months ago

This is a no-brainer. If the step-up isn't linked to the rating, it's just a gimmick. I hope the exam doesn't try to trick us with that.

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Gary

4 months ago

D) Will lead to a change only if there is a linkage to the issuer's rating

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James

4 months ago

I agree, it's important for the step-up to be linked to the issuer's rating to have a meaningful impact.

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Kati

4 months ago

A) no change as step is not linked to issuers rating

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Lizbeth

4 months ago

D) Will lead to a change only if there is a linkage to the issuer's rating

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Rachael

4 months ago

I agree, it's important for the step-up to be tied to the issuer's rating to have real impact.

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Glendora

4 months ago

A) no change as step is not linked to issuers rating

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Almeta

5 months ago

Good point, maybe I need to rethink my answer.

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Isaiah

5 months ago

Option B is tempting, but I think Paulene and 2 have a point. The step-up needs to be tied to the rating for it to affect the basis.

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Venita

4 months ago

Yes, without that linkage, the step-up feature may not necessarily lead to a positive basis.

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Rosalind

5 months ago

I agree, the step-up should be linked to the issuer's rating for it to have an impact.

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Clorinda

5 months ago

I agree with Paulene. The step-up feature is meaningless unless it's connected to the issuer's creditworthiness.

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Arlette

4 months ago

D) Will lead to a change only if there is a linkage to the issuer's rating

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Jackie

4 months ago

I think the step-up feature should be tied to the issuer's rating.

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Chanel

5 months ago

B) positive basis because the bond holder is compensated

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Christiane

5 months ago

A) no change as step is not linked to issuers rating

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Patria

5 months ago

But if there's no linkage to the issuer's rating, how can it be positive?

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Almeta

5 months ago

I disagree, I believe it's D.

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Patria

6 months ago

I think the answer is B.

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Paulene

6 months ago

Option D seems like the most logical choice. The step-up feature should only impact the basis if it's linked to the issuer's rating.

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Kenneth

5 months ago

So, it seems like the step-up feature won't have any impact if it's not connected to the issuer's rating. Option D is the way to go.

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Daniela

5 months ago

Yes, that's true. If there's no linkage to the rating, then it shouldn't really affect the basis.

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Beth

5 months ago

I agree, option D makes the most sense. The step-up feature should only matter if it's tied to the issuer's rating.

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