FSI FINAL EXAM 2025/2026 QUESTIONS
AND ANSWERS 100% PASS
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
---public issue
---quasi, 144A
---private placement
---syndicated bank loans
pg. 1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
,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
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
pg. 2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, Common Equity
Commercial Paper - ANS excess returns in market that AAA companies can borrow,
unsecured
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
.
.
.
BBB-
----
BB+
pg. 3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
AND ANSWERS 100% PASS
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
---public issue
---quasi, 144A
---private placement
---syndicated bank loans
pg. 1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
,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
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
pg. 2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, Common Equity
Commercial Paper - ANS excess returns in market that AAA companies can borrow,
unsecured
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
.
.
.
BBB-
----
BB+
pg. 3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED