Goldman Sachs Interview Question: "Company A with a market cap ... | Glassdoor

Interview Question

Corporate Credit Sales Analyst Interview New York, NY

"Company A with a market cap of $25B announces a $5B stock

  buy-back program. How would the CDS on Company A react?"

Interview Answer

3 Answers



Anonymous on Mar 4, 2010

Is this correct? A stock buyback with reduce cash and equity, which increase the leverage ratio. That would increase the CDS spread.

Yorkville on Jul 11, 2010

Yorkville seems right. Leverage goes up and there is less cash now. Higher risk of default leads to higher risk premium --> higher cds spread

Anonymous on Jan 22, 2013

Add Answers or Comments

To comment on this, Sign In or Sign Up.