Analyzing The Concept Of Zeta Score And The Details It Includes?

1582 Words May 10th, 2016 7 Pages
1. Expound on credit analysis. Use the concept of zeta score and the details it includes?
Credit analysis is the process of examining the creditability, credit history and financial situation of client or potential borrowers. The banks or moneylenders to ensure safety of their money use this process. At the same time, bond portfolio managers or investors to debt issuing companies on the basis of their credit rating and financial situations also define credit analysis as investigation process that performs. Credit rating is an important instrument that used by lenders when performing credit analysis of a bond issuing institution or individual (Johnson, 2010). The concept of zeta score is useful to identify the risk of bankruptcy associated with corporations or individuals. In case of credit analysis, zeta analysis is quite effective to list applicants of loan as per their zeta score. This process is useful to identify those applicants who have high risk of bankruptcy on the basis of their high zeta score, which is significant to avoid potential loss (Reilly and Brown, 2011).

2.a )Why is duration applicable to bonds which are not callable? Explain in your own words the reason that it does not apply to callable bonds and common stocks as well as real estate?
The duration is applicable to bonds only when these are not callable. It is because callable bonds are those that can be redeemed by the issuer prior to its maturity date. Under callable bonds, issuer has right to return…
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