Hard Debt Capital Markets Practice Questions

84 free hard-difficulty Debt Capital Markets questions, drawn live from KomFi's calibrated bank. These are the items that separate top scorers — every one carries a full explanation and trap analysis once you sign in.

1. Which yield measure provides the most conservative estimate of the return for this investor?
2. If the 5-year cross-currency basis is -25 bps (meaning EUR is more expensive to swap back to USD), what is the
3. If the 3-year yield is 4.1% and the bond's modified duration is 3.5, what is the total 1-year expected return
4. Which of the following is a primary reason a corporation might issue 'Senior Non-Preferred' debt?
5. Excluding funding costs, what is the 'basis' being captured?
6. A CLO equity tranche is often referred to as a 'leveraged be… — Why is this?
7. What happens to the Z-spread of a bond if the underlying government benchmark curve shifts upward in a paralle
8. Why did the transition from LIBOR to SOFR necessitate the use of 'compounding in arrears' for floating-rate no
9. What is the primary reason an issuer might choose to issue a 'Reverse Yankee' bond (a euro-denominated bond by
10. An issuer is deciding between issuing a 'bullet' bond and a 'sinker' (sinking fund) bond. A sinker bond is gen
11. If cumulative losses on the pool reach $120 million, how are the losses distributed across the tranches?
12. If the investor finances the bond in the Repo market at GC - 20 bps (LIBOR being GC equivalent), what is the p
13. Which of the following tranches will experience a principal impairment?
14. Which peer is fundamentally riskier, and what is the most likely structural reason?
15. In a resolution scenario, what are the two defining features of this instrument that distinguish its risk prof
16. In a Collateralized Loan Obligation (CLO) structure, what is the primary function of the Interest Coverage (IC
17. Why might the treasurer choose to execute a 'Tender Offer' alongside a new 10-year bond issue today?
18. If the company's EBITDA declines by 40%, causing its leverage ratio to rise from 5.5× to 8.0× (well above the
19. A bank is issuing an Additional Tier 1 (AT1) bond. Which structural feature is unique to this instrument compa
20. A B-rated issuer executes a liability management exercise (LME) by moving its intellectual property to an 'unr
21. Why is the 'Leverage Ratio' a critical constraint for bank dealers even when holding safe assets like governme
22. In an 'Asset Swap', what is the investor primarily doing?
23. A 'fallen angel' is best described as an issuer that has:
24. What is the most appropriate yield measure for a conservative investor to use, and why?
25. Which of the following correctly identifies the primary trade-off the bank face?
26. A B3/B-minus rated company is issuing 'covenant-lite' Senior Secured Term Loan B. Which of the following prote
27. Which event would most likely trigger a mandatory conversion of this bond into equity?
28. An analyst is evaluating a 'make-whole call' provision. Why is this feature generally considered 'investor-fri
29. Which of the following would be considered a 'technical' driver of credit spread widening, as opposed to a 'fu
30. When calculating the issuer's credit ratios for a new bond issuance, how should an analyst treat this liabilit

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