Question 1

According to this credit scoring model, the variable that has the highest positive impact on the probability of rescheduling is

Accepted Answer

A)  debt service ratio.
B)  import ratio.
C)  investment ratio.
D)  variance of export revenue.
E)  rate of growth of the domestic money supply.F) A) and D)
G) A) and E)

Question 2

One cost of rescheduling for a lender is the potential placement of the lender on a regulatory watch or problem list.

Accepted Answer

A) True 
 B)False

Question 3

International loan contracts that contain cross-default provisions allow the country to select specific lenders for special default treatment.

Accepted Answer

A) True 
 B)False

Question 4

High rates of domestic inflation impact the credit scoring model of sovereign country risk exposure through which of the following variables?

Accepted Answer

A)  The debt service ratio.
B)  The import ratio.
C)  The variance of export revenue.
D)  The investment ratio.
E)  Domestic money supply growth.F) A) and B)
G) D) and E)

Question 5

Prior to World War II, most international debt was in the form of bank loans.

Accepted Answer

A) True 
 B)False

Question 6

The export revenue variance (VAREX) ratio tends to have high systematic risk elements in a CRA analysis.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is true of sovereign bonds?

Accepted Answer

A)  They are bonds backed by collateral.
B)  Brady bonds are replacing them because of their higher interest rates.
C)  Their benefit is the "saving" from not having to pledge U.S.Treasury bonds as collateral.
D)  Their value partly reflects the value of collateral underlying the principal and/or interest on the issue.
E)  They are not a segment in the secondary market for sovereign debt.F) A) and D)
G) A) and C)

Question 8

If the credit risk of a foreign borrower is good, then the sovereign country risk is irrelevant.

Accepted Answer

A) True 
 B)False

Question 9

Buyers of LDC debt in secondary markets typically are large FIs who are willing to accept write-downs of loans on their balance sheets.

Accepted Answer

A) True 
 B)False

Question 10

In international finance, the debt service ratio is found by dividing interest and amortization payments by the

Accepted Answer

A)  total foreign exchange reserves.
B)  real investment.
C)  gross national product.
D)  value of exports.
E)  money supply.F) A) and B)
G) B) and C)

Exam 14: Sovereign Risk

Buyers of LDC debt in secondary markets typically are large FIs who are willing to accept write-downs of loans on their balance sheets.

Correct Answer
verified

One cost of rescheduling for a lender is the potential placement of the lender on a regulatory watch or problem list.

Correct Answer
verified

Prior to World War II, most international debt was in the form of bank loans.

Correct Answer
verified

In international finance, the debt service ratio is found by dividing interest and amortization payments by the

Correct Answer
verified

High rates of domestic inflation impact the credit scoring model of sovereign country risk exposure through which of the following variables?

Correct Answer
verified

If the credit risk of a foreign borrower is good, then the sovereign country risk is irrelevant.

Correct Answer
verified

The export revenue variance (VAREX) ratio tends to have high systematic risk elements in a CRA analysis.

Correct Answer
verified

Which of the following is true of sovereign bonds?

Correct Answer
verified

According to this credit scoring model, the variable that has the highest positive impact on the probability of rescheduling is

Correct Answer
verified

International loan contracts that contain cross-default provisions allow the country to select specific lenders for special default treatment.

Correct Answer
verified

Exam 14: Sovereign Risk

Buyers of LDC debt in secondary markets typically are large FIs who are willing to accept write-downs of loans on their balance sheets.

Correct AnswerverifiedShow Answer

One cost of rescheduling for a lender is the potential placement of the lender on a regulatory watch or problem list.

Correct AnswerverifiedShow Answer

Prior to World War II, most international debt was in the form of bank loans.

Correct AnswerverifiedShow Answer

In international finance, the debt service ratio is found by dividing interest and amortization payments by the

Correct AnswerverifiedShow Answer

High rates of domestic inflation impact the credit scoring model of sovereign country risk exposure through which of the following variables?

Correct AnswerverifiedShow Answer

If the credit risk of a foreign borrower is good, then the sovereign country risk is irrelevant.

Correct AnswerverifiedShow Answer

The export revenue variance (VAREX) ratio tends to have high systematic risk elements in a CRA analysis.

Correct AnswerverifiedShow Answer

Which of the following is true of sovereign bonds?

Correct AnswerverifiedShow Answer

According to this credit scoring model, the variable that has the highest positive impact on the probability of rescheduling is

Correct AnswerverifiedShow Answer

International loan contracts that contain cross-default provisions allow the country to select specific lenders for special default treatment.

Correct AnswerverifiedShow Answer

Correct Answer
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