21.Which of the following is TRUE in relation to negative covenants？
　　A. They prohibit the borrower from undertaking new lines of business.
　　B. They prohibit the borrower from certain actions such as issuing new debt.
　　C. They require the borrower to adhere to all the terms and conditions of the loan.
　　D. They require the borrower to take actions to service the debt and maintain collateral.
　　Correct answer：B
　　22.Which of the following is a measure of short-term solvency？
　　A. Current ratio.
　　B. Times interest coverage.
　　C. Debt to capitalization ratio.
　　D. Total debt to earnings ratio.
　　Correct answer：A
　　23.Which of the following are included in the ‘four Cs’ of credit analysis？
　　I. Capacity.
　　II. Correlation.
　　III. Character.
　　IV. Collateral.
　　A. I and II.
　　B. II and III.
　　C. I， III and IV.
　　D. II， III， and IV.
　　Correct answer：C
　　24.Baa-rated firms have been observed to have probability of default of 0.4， 0.75 and 1.3 percent during years 1， 2， and 3 from present. The probability that a Baa-rated firm will default within the next three years is CLOSEST to：
　　A. 0.82%.
　　B. 2.04%.
　　C. 2.43%.
　　D. 2.85%.
　　Correct answer：C
　　25.Ba-rated firms have been observed to have a constant probability of default of 2 percent each year over a 10-year horizon. The probability that a Ba-rated firm will default at some point within 10 years is CLOSEST to：
　　A. 9.88%.
　　B. 12.71%.
　　C. 18.29%.
　　D. 20.00%.
　　Correct answer：C
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