[2008] Topic 40: Sovereign Risk 相关习题 difference, government, political, currency, exchange

aianjie

 

AIM 1: Describe the difference between credit risk and sovereign risk and define debt repudiation and debt rescheduling.

1、Simran is a small Caribbean country that depends on sugar as its primary export. The risk of the Simran government deciding that it will not pay its foreign currency loan is an example of:

A) political risk.

B) foreign exchange risk.

C) downgrade risk.

D) sovereign risk.

shanshan_146

辛苦！

shanshan_146

辛苦了！

pizi

顶

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

 

 

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 Economic data sets are often out of date or inaccurate.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