1. What is a credit rating?

A credit rating represents the rating agency's opinion on the likelihood of a rated debt obligation being repaid in
full and on time. A simple alphanumeric symbol is normally used to convey a credit rating.
2. How does a credit rating agency differ from a credit bureau?
A credit rating agency provides an opinion relating to future debt repayments by borrowers. A credit bureau
provides information on past debt repayments by borrowers.
3. Is a credit rating a recommendation to invest in a debt instrument?
A credit rating is not a recommendation to buy, hold, or sell a debt instrument. A credit rating is one of the inputs
used by investors to make an investment decision.
4. What is the difference between credit rating and equity research?
Credit ratings are assigned to debt instruments, while equity research relates to equity shares. A credit rating is
focused on the risk of non-payment, the primary variable in debt instruments. Equity research is focused on
growth possibilities, for that is what drives equity valuations.
5. How does a credit rating differ from an audit?
A credit rating agency relies on a variety of information sources, including published annual reports. An audit
process is designed to detect fraud or misrepresentation of information, whereas the credit rating process is not.
6. How does a rating agency operate when issuers' disclosure levels are low?
During a credit rating exercise, issuers provide rating agencies with confidential information and insights into
business strategy that are not normally available in the public domain. As a policy, CRISIL does not assign credit
ratings without issuer interaction, except when a previously rated instrument is outstanding or when a specific
investor asks for a private exercise. In cases where CRISIL believes that the information is inadequate to assign a
rating, it may not do so. Also, for rated clients, if subsequent information is not adequate, CRISIL may suspend
the rating and inform the investors.
7. Does a credit rating assure repayment?
A credit rating is not an assurance of repayment of the rated instrument. Rather, it is an opinion on the relative
degree of risk associated with such repayment. This opinion represents a probabilistic estimate of the likelihood of
default.
8. Who pays for a credit rating?
Most credit rating agencies across the world use a revenue model where the issuer pays for the credit rating.
Alternative revenue models (such as the one based on investor fees) pose numerous challenges in terms of ease
and practicality of implementation that have not yet been overcome.
9. If the issuer pays for the rating, how does a credit rating agency maintain its independence?
Although the issuer pays for the rating, the investor uses it. Like any other product or service, the 'value' of the
rating depends entirely on the perceptions of the investor. Investor perceptions are based on the credibility of the
past ratings assigned by each rating agency. (Please also refer to section - How CRISIL manages Conflict)
10. Who regulates a rating agency?
The capital market regulator regulates rating agencies in most regions. In India, the capital markets regulator, the
Securities and Exchange Board of India (SEBI), regulates the rating agencies in the country.

11. Is competition desirable in the credit rating industry?

Competition in the credit rating industry is desirable to meet the 'better service at a cheaper price' objective on an
ongoing basis. However, it is essential to guard against some undesirable effects of competition, such as lax
ratings or sub-optimal quality of research and analysis.
12. How do investors benefit from a credit rating?
Credit ratings help investors facilitate comparative assessment of investment options, complement the investors'
own credit analysis, and allow asset monitoring.
13. What do the various credit rating symbols mean?
CRISIL uses simple alphanumeric symbols to convey credit ratings. CRISIL assigns credit ratings to debt
obligations on three basic scales: the long-term scale, the short-term scale, and the fixed deposit scale. To
illustrate, CRISIL's long-term credit rating scale and the description associated with each category on the rating
scale is given below:
Symbol
(Rating category).

Description (with regard to the likelihood of meeting the debt

obligations on time)

AAA

Highest Safety

AA

High Safety

Adequate Safety

BBB

Moderate Safety

BB

Inadequate Safety

High Risk

Substantial Risk

Default

14. Does the minus sign in a rating symbol have negative connotations relating to the issuer's performance
or its debt-servicing capability?
Plus and minus symbols are used to indicate finer distinctions within a rating category. The minus symbol
associated with ratings has no negative connotations whatsoever.
15. What are Structured Obligation (so) ratings? Are they different from other credit ratings?
Structured Obligation (so) ratings are ratings that are based on a 'credit enhancement' mechanism and/or a
structured payment mechanism. A suffix in the form of '(so)' indicates the presence of non-credit risk in the form of
risks associated with the instrument structure.
16. What is the validity period of a credit rating?
Credit ratings are assigned either to specific instruments or to the general debt obligations of issuers. CRISIL
assigns credit ratings to debt obligations. A rating is valid until the rated debt obligation is fully paid.
17. How are credit rating changes communicated?
Once a credit rating is assigned and published, CRISIL keeps the credit rating under surveillance until the
instrument is fully repaid. The surveillance process may result in credit rating changes from time to time. All

changes in CRISIL's credit ratings are communicated publicly through CRISIL's website (www.crisil.com) and
media releases.
18. Why do credit ratings change?
Credit ratings are assigned based on certain expectations and assumptions about variables that impact the
issuer's performance. However, these variables can change, causing the rated entities' performance to deviate
materially from expectations. This is reflected in their changed credit ratings.
19. If a credit rating is downgraded, does it mean that a default is imminent?
Not necessarily. In most cases, a downgrade does not mean that a default is anticipated. All it indicates is that the
risk associated with the debt obligation is relatively higher than what it was before the downgrade.
20. Does the size of the rated debt obligation affect its credit rating?
No. What matters is the size of the total debt in the company, and not the amount that is sought to be rated.
21. What are 'Provisional' ratings?
In case completion of certain critical steps/documentation is pending at the time of rating assignment, CRISIL will
assign provisional ratings to such instruments which will be characterised by a prefix 'Provisional' to the rating
symbol. To elaborate, a prefix of 'Provisional' to a CRISIL-assigned rating indicates that the rating centrally factors
in the completion of certain critical steps/documentation by the issuer for the instrument; without this, the rating
would either have been different or not assigned. The provisional nature of such ratings will be disclosed by
CRISIL in its communications, including rating letter and rating rationale. Once the relevant steps/documents (as
per expectations when the provisional ratings were assigned) are in place, the provisional ratings will be
converted into final ratings.

1. Tell me about yourself?

2.Where do you see yourself five years from now?
3.How would you do a credit analysis of an industry?
4.What is FCFF?
5.Insurance industry risk
6.What is NPV and IRR? Difference between them? What is WACC?
7.How would you analyse a retail industry SME
8.Financial Risk Management,options strategies, Derivatives PUT & CALL Options
Pay off Diagrams
9.How to value equity shares and what is cost of equity?
10.what is enterprise value,capital adequacy ratio,liquidity ratio ?
11.Finance- lengthy as 80% was calculation based and 25 mins to solve. questions
on currency swaps. future and options. interest coverage ratio,dividend, which stock

INTERVIEW QUESTIONS OF CRISIL

is more preferable, many items on basic balance sheet items calculation,valuation

of equity
12.operating income, From EBITDA form cash flow statement, difference between
cash flow and fund flow, difference between equity shares and
preference shares, types of preference shares, question on calculating the petrol
consumption in a city,
13.When a company is taking debt and show the debt in its cash balance, how will
you decide the credit rating for this company?
14.Company A company calculates depreciation on Straight line method while
company B calculates it on Reducing balance method . Whose books would show
higher profits.?
15.ratios need to be used to calculate the increase in risk. Current ratio, acid test
ratio and return on capital employed can be used.
16.What is Operating Lease & Financial Lease?
17. How will you forecast the performance of an IT company? (it can be any sector)
How will you assess the liquidity of a company, what are the various ratios to judge
the liquidity and financial stability of a company. (You will have to explain the
formulae and implications of each ratio in real situation)How will you value a
company?
18.What is Beta?
19.How will you draw a payoff of call option
20.How will you do valuation of intangibles?
21.What is fiscal deficit?
22.What are contingent liabilities?
23.How will you increase the liquidity of a company?
24.Why long term debt comes under capital employed? How to calculate GDP? What
is deffered tax?
25.What is your Knowledge on Ports?
26.Which is better indicator Debt to equity or Debt to EBITDA?
27.Excel analysis (filters, pivots, what-if analyses, etc)
28.What will happen if stock split occurs?

29.Stock of different betas were given and i had to select a stock based on the
betas?
30.What is the Journal Entry for creating a Goodwill?