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FSI Final Exam Questions and Correct
Answers/ Latest Update / Already Graded
5 Types of Debt
Healthy -> Dead
Ans: 1. Investment Grade
2. High Yield (Junk, Levered)
3. Higher High Yield - Distress
4. Very High High Yield - Vulture
5. Bankruptcy
Circle of Life of Debt
Ans: Bad debt becomes equity of a new company
Raising capital tree map
Ans: - equity
---private
---public
------ipo
------green shoe
-debt
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---public issue
---quasi, 144A
---private placement
---syndicated bank loans
Public issues
Ans: - registered with the SEC
- public can buy
Quasi - 144A
Ans: allows for public selling of bonds of a company that cant
file paperwork to be public
Private Placements
Ans: not registered with SEC
insurance company driven
Syndicated Bank Loan
Ans: Investment Grade - sold to other commercial banks
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High Yield - sold to institutions
Liability Waterfall of B/S
Ans: Short Term Bank Borrowing (Commercial Paper)
Commercial Paper Outstanding
Sr Secured Debt
Sr Debentures
Sub Debentures
Preferred Stock
Common Equity
Commercial Paper
Ans: excess returns in market that AAA companies can borrow,
unsecured
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maturity > 1 yr
Commercial Paper Back Stop
Ans: credit support or backup funds for a financial instrument
or transaction
A1/P1 companies dont need it
A3 needs it because more likely to default
Major difference between financing with debt and equity
Ans: Rating Agencies
S&P/Fitch Rating vs Moodys Rating
Ans: S&P/Fitch
AAA
AA+
AA-
A
All rights reserved © 2025/ 2026 |
FSI Final Exam Questions and Correct
Answers/ Latest Update / Already Graded
5 Types of Debt
Healthy -> Dead
Ans: 1. Investment Grade
2. High Yield (Junk, Levered)
3. Higher High Yield - Distress
4. Very High High Yield - Vulture
5. Bankruptcy
Circle of Life of Debt
Ans: Bad debt becomes equity of a new company
Raising capital tree map
Ans: - equity
---private
---public
------ipo
------green shoe
-debt
All rights reserved © 2025/ 2026 |
, Page |2
---public issue
---quasi, 144A
---private placement
---syndicated bank loans
Public issues
Ans: - registered with the SEC
- public can buy
Quasi - 144A
Ans: allows for public selling of bonds of a company that cant
file paperwork to be public
Private Placements
Ans: not registered with SEC
insurance company driven
Syndicated Bank Loan
Ans: Investment Grade - sold to other commercial banks
All rights reserved © 2025/ 2026 |
, Page |3
High Yield - sold to institutions
Liability Waterfall of B/S
Ans: Short Term Bank Borrowing (Commercial Paper)
Commercial Paper Outstanding
Sr Secured Debt
Sr Debentures
Sub Debentures
Preferred Stock
Common Equity
Commercial Paper
Ans: excess returns in market that AAA companies can borrow,
unsecured
All rights reserved © 2025/ 2026 |
, Page |4
maturity > 1 yr
Commercial Paper Back Stop
Ans: credit support or backup funds for a financial instrument
or transaction
A1/P1 companies dont need it
A3 needs it because more likely to default
Major difference between financing with debt and equity
Ans: Rating Agencies
S&P/Fitch Rating vs Moodys Rating
Ans: S&P/Fitch
AAA
AA+
AA-
A
All rights reserved © 2025/ 2026 |