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NEW QUESTION: 1
Which of the following statements is true:
I. Recovery rate assumptions can be easily made fairly accurately given past data available from credit rating agencies.
II. Recovery rate assumptions are difficult to make given the effect of the business cycle, nature of the industry and multiple other factors difficult to model.
III. The standard deviation of observed recovery rates is generally very high, making any estimate likely to differ significantly from realized recovery rates.
IV. Estimation errors for recovery rates are not a concern as they are not directionally biased and will cancel each other out over time.
A. I, II and IV
B. III and IV
C. II and III
D. II and IV
Answer: C
Explanation:
Explanation
Recovery rates vary a great deal from year to year, and are difficult to predict. Therefore statement III is true.
Similarly, any attempt to predict these is hamstrung by a high standard error, which can be as high as the historical mean itself. The error does not cancel itself out due to the effect of the business cycle making the error directionally biased. Thus statement IV is false.
Statement II is true as these are all factors that make forecasting recovery rates for any credit risk model rather difficult. Statement I is false because recovery rates are difficult to predict and assumptions are not easy to make.

NEW QUESTION: 2

A. Option E
B. Option C
C. Option D
D. Option B
E. Option A
Answer: C,D,E

NEW QUESTION: 3
Scenario
You are a planner in a city that has recently opened a new shelter for homeless people. The shelter opens each evening during the winter and provides a place for people to sleep during the night in dormitory-style rooms with cots. Some community members would like the shelter closed because they feel that the large number of people who congregate on the sidewalks near the shelter as they wait for it to open pose a threat to public safety. Your planning director decides to address these concerns by classifying the shelter as a hotel. The planning director knows that the zoning ordinance specifies that a hotel must provide private sleeping quarters, which the shelter does not. By classifying the shelter as a hotel, the planning director is taking steps to close the shelter based on the ground that it is in violation of the zoning ordinance. Suppose you believe that the planning director has assumed a position that is not politically feasible and consequently will be reversed.
What might you do?
Answer:
Explanation:
See the solution below
Explanation
You might choose to take no action. However, waiting until a higher authority reverses poor or unethical planning decisions is not the best course of action for a professional planner. Also, remember that a professional planner does have a special responsibility to plan for the needs of the disadvantaged (Ethical Principle 1)