aianjie

 

AIM 4: Describe the different mechanisms for dealing with sovereign risk exposure.

1、A multiyear restructuring agreement (MYRA) for a $100 million loan with a sovereign has the following features: maturity extended from two to five years; principal amortization for four years at 25 percent per year; grace period of one year; up-front fee of 1.25 percent; loan rate of 6 percent; and bank discount rate of 6.75 percent. If the original loan had a value equal to its par, the concessionality attached to this MYRA is closest to:

A) $52,570,000.

B) $98,924,000.

C) $997,000.

D) $47,430,000.

aianjie

 

The correct answer is C

The MYRA loan has a value of:

 

 [attach]13917[/attach]

 

The concessionality is then the difference between the original loan and the MYRA loan value = 100 – 99.003 = $0.997 million = $997,000.

[此贴子已经被作者于2009-6-27 15:04:48编辑过]

aianjie

 

2、Which variable is NOT included in sovereign risk probability models?

A) Investment ratio.

B) Debt service ratio.

C) Variance of import revenue.

D) Domestic money supply growth.

aianjie

 

The correct answer is C

Variance of export (not import) revenue is used in sovereign risk probability models.

aianjie

 

AIM 3: Describe the six major problems of using traditional country risk analysis models and techniques.

Which of the following is NOT a problem with traditional country risk analysis (CRA) models?

      I. Using population groups that are too narrow.

     II. Economic data sets are often out of date or inaccurate.

    III. Model measures “stand-alone” country risk.

    IV. Model includes inaccurate political risk measures.

A) II and III.

B) I and IV.

C) I and III.

D) II and IV.

aianjie

 

The correct answer is B

Traditional CRA models use population groups that are too broad and include no political risk measures. II and III are problems with the model.

aianjie

 

AIM 3: Describe the six major problems of using traditional country risk analysis models and techniques.

Which of the following is NOT a benefit of rescheduling sovereign debt to the borrower? Rescheduling debt:

      I. increases the present value (PV) of a borrower's future payments.

     II. increases a borrower's consumption of foreign imports.

    III. increases the rate of a borrower's domestic investment compared to default.

    IV. decreases the PV of a borrower's future payments.

A) I and III.

B) I only.

C) II and IV.

D) III only.

aianjie

 

The correct answer is B

Borrowers’ benefits from rescheduling debt:

Lowers the present value (PV) of its future hard currency payments, and thereby increases the consumption of foreign imports.

Increases the rate of its domestic investment compared to default.

aianjie

 

AIM 2: Describe the five key economic variables in measuring the probability of rescheduling sovereign risk.

Country F has a debt service ratio (DSR) of 4. Its exports total $17 billion, and its principal repayments are $3 billion. The value of its interest payments is closest to:

A) $65.0 billion. 

B) $2.3 billion.

C) $4.0 billion. 

D) $11.0 billion.

aianjie

 

The correct answer is A

 

 

[attach]13918[/attach]