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

 

The correct answer is C

The MYRA loan has a value of:

 

 

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[2008] Topic 40: Sovereign Risk 相关习题

2009-6-27 15:04

 

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

 

The correct answer is D

Debt repudiation is an unequivocal cancellation of all current and future foreign debt and equity obligations of a borrower.

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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 B

Cross-default provisions address loans and state that if a country were to default on just one of its loans, all other outstanding loans would automatically be in default as well. Cross-default clauses prevent a country from choosing a group of weak lenders for special default treatment.

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4、Many international loan contracts contain cross-default provisions to prevent sovereigns from:

A) favoring only those lenders who reschedule debt payments.

B) canceling their own obligations while seeking to collect from others.

C) taking advantage of weak creditors. 

D) moving valuable assets to third countries, out of the reach of creditors. 

aianjie

 

The correct answer is C

Cross-default provisions treat a default on one loan as a default on all. This keeps sovereigns from defaulting on obligations to weak creditors and forcing concessions from them.

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5、When a sovereign lender defaults on its debt and can negotiate a complete cancellation, it is referred to as a:

A) multiyear restructuring agreement.

B) debt rescheduling.

C) debt amnesty.

D) debt repudiation.

aianjie

 

The correct answer is D

The risk of a sovereign government willingly confiscating assets, freezing assets, or not fulfilling its obligations is called sovereign risk. Political risk is the willingness and ability of a government to enforce its constitution and laws. Foreign exchange risk is the risk of fluctuations in foreign currency values. Downgrade risk is a component of credit risk that deals with a major credit rating agency giving a lower credit rating to a corporate debt issuer.