stuck probability exam z score and standard deviations
Please read the exam questions below.
In August 2017, Tesla Motors raised $1.8 billion in corporate bonds, priced at 5.3%, 8-year notes. The bonds were subordinated to more senior debt and received a B- rating from S&P and a B3 rating from Moodyâ€
s.
(1)Using the credit analytics discussed in our class, and traditional metrics, what does your group think should be Teslaâ€s bond rating before and just after the new bond issue?
(2)Would your answer change if the firm raised an additional $3 billion in bonds to meet production objectives?
(3)What is your estimate of the Bond Rating Equivalent (BRE) as of the most recent (Q1-2019) financials and latest (June 26, 2019) stock price?
(4)Given your answers #1 and #2 above, what are your expected cumulative PD (Probability of Default) and LGD (Loss Given Default) for Tesla for one-year and five(5) years?
(5)What are the bonds issued in 2017 now (June 26, 2019) selling at and what is the bondâ€s yield to maturity?
(6)Which of the two Z-Score models (Z or Zâ€) is most applicable to a firm like Tesla? Why? (7)What are the main differences between Z and Zâ€? List up to four differences.
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