Question 1

Which of the following statements is true?

Accepted Answer

A) Governments and regulators seem to view the social costs of default on international bonds more worrisome than those on loans. 
B) Governments and regulators seem to view the social costs of default on international bonds less worrisome than those on loans. 
C) Governments and regulators seem to view the social costs of default on international bonds as worrisome as those on loans. 
D) Governments and regulators have no view on the social costs of default on international bonds or loans. 
A) Governments and regulators seem to view the social costs of default on international bonds more worrisome than those on loans. 
B) Governments and regulators seem to view the social costs of default on international bonds less worrisome than those on loans. 
C) Governments and regulators seem to view the social costs of default on international bonds as worrisome as those on loans. 
D) Governments and regulators have no view on the social costs of default on international bonds or loans. B

Question 2

Debt repudiations were more common before World War II compared to now.

Accepted Answer

A) True 
 B)False  True

Question 3

Both buyers and sellers of LDC debt seem willing to participate in the LDC debt markets for the purpose of rebalancing the country risk exposure on their balance sheets.

Accepted Answer

A) True 
 B)False  True

Question 4

Norway was rated as the country with the least chance of default according to the Institutional Investor's 2012 country credit risk ratings.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is true?

Accepted Answer

A) A lender wishing to provide funds to a borrower residing in a foreign country only needs to consider the credit quality of the borrower. 
B) A lender wishing to provide funds to a borrower residing in a foreign country only needs to consider the sovereign risk quality of the country in which the borrower resides. 
C) A lender wishing to provide funds to a borrower residing in a foreign country should consider either the credit quality of the borrower or the sovereign risk quality of the country in which the borrower resides. 
D) A lender wishing to provide funds to a borrower residing in a foreign country should consider both the credit quality of the borrower and the sovereign risk quality of the country in which the borrower resides. 
A) A lender wishing to provide funds to a borrower residing in a foreign country only needs to consider the credit quality of the borrower. 
B) A lender wishing to provide funds to a borrower residing in a foreign country only needs to consider the sovereign risk quality of the country in which the borrower resides. 
C) A lender wishing to provide funds to a borrower residing in a foreign country should consider either the credit quality of the borrower or the sovereign risk quality of the country in which the borrower resides. 
D) A lender wishing to provide funds to a borrower residing in a foreign country should consider both the credit quality of the borrower and the sovereign risk quality of the country in which the borrower resides.

Question 6

Which of the following statements is true?

Accepted Answer

A) There should be a positive relationship between the size of a country's investment ratio and the probability of rescheduling. 
B) There should be a negative relationship between the size of a country's investment ratio and the probability of rescheduling. 
C) There should be no relationship between the size of a country's investment ratio and the probability of rescheduling. 
D) The relationship between the size of a country's investment ratio and the probability of rescheduling depends on a set of variables relating to the borrowing country. 
A) There should be a positive relationship between the size of a country's investment ratio and the probability of rescheduling. 
B) There should be a negative relationship between the size of a country's investment ratio and the probability of rescheduling. 
C) There should be no relationship between the size of a country's investment ratio and the probability of rescheduling. 
D) The relationship between the size of a country's investment ratio and the probability of rescheduling depends on a set of variables relating to the borrowing country.

Question 7

All of the following are relevant determinants of sovereign risk exposure: the rate of domestic money supply growth; the variance of export revenue, and the size of the population.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is true?

Accepted Answer

A) There should be a positive relationship between the size of a country's variance of export revenue and the probability of rescheduling. 
B) There should be a negative relationship between the size of a country's variance of export revenue and the probability of rescheduling. 
C) There should be no relationship between the size of a country's variance of export revenue and the probability of rescheduling. 
D) The relationship between the size of a country's variance of export revenue and the probability of rescheduling depends on a set of variables relating to the borrowing country. 
A) There should be a positive relationship between the size of a country's variance of export revenue and the probability of rescheduling. 
B) There should be a negative relationship between the size of a country's variance of export revenue and the probability of rescheduling. 
C) There should be no relationship between the size of a country's variance of export revenue and the probability of rescheduling. 
D) The relationship between the size of a country's variance of export revenue and the probability of rescheduling depends on a set of variables relating to the borrowing country.

Question 9

Which of these are major segments of the secondary market for LDC debt?

Accepted Answer

A) performing loans 
B) sovereign bonds 
C) non-performing loans 
D) sovereign bonds, performing loans and non-performing loans 
A) performing loans 
B) sovereign bonds 
C) non-performing loans 
D) sovereign bonds, performing loans and non-performing loans

Question 10

Explain the relationships between a country's probability of rescheduling and the country's:
(a) domestic money supply growth
(b) debt service ratio
(c) investment ratio
(d) variance of export revenue

Accepted Answer

(a) Rapid domestic money supply growth i

Question 11

In accordance with the Heritage Foundation, which of the following definitions best represents the term 'economic freedom'?

Accepted Answer

A) The absence of government coercion or constraint on the production, distribution or consumption of goods and services at all costs to protect and maintain liberty itself. 
B) The absence of government coercion or constraint on the production, distribution or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself. 
C) The absence of government coercion or constraint on the consumption of goods and services at all costs to protect and maintain liberty itself. 
D) The absence of government coercion or constraint on the production and distribution or consumption of goods and services at all costs to protect and maintain liberty itself. 
A) The absence of government coercion or constraint on the production, distribution or consumption of goods and services at all costs to protect and maintain liberty itself. 
B) The absence of government coercion or constraint on the production, distribution or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself. 
C) The absence of government coercion or constraint on the consumption of goods and services at all costs to protect and maintain liberty itself. 
D) The absence of government coercion or constraint on the production and distribution or consumption of goods and services at all costs to protect and maintain liberty itself.

Question 12

Multi-year restructuring agreement (MYRA) is the official term for the:

Accepted Answer

A) rescheduling of a sovereign loan 
B) repudiation of a sovereign loan 
C) repayment of a sovereign loan 
D) re-evaluation of a sovereign loan 
A) rescheduling of a sovereign loan 
B) repudiation of a sovereign loan 
C) repayment of a sovereign loan 
D) re-evaluation of a sovereign loan

Question 13

Debt moratorium refers to a delay in repaying interest and/or principal on debt.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following are normally traded at very deep discounts from 100 per cent?

Accepted Answer

A) restructured loans 
B) Brady bonds 
C) sovereign bonds 
D) non-performing loans 
A) restructured loans 
B) Brady bonds 
C) sovereign bonds 
D) non-performing loans

Question 15

Which of the following countries was rated as the country with the least chance of default according to the Institutional Investor's 2012 country credit risk ratings?

Accepted Answer

A) Greece 
B) Norway 
C) Germany 
D) Australia 
A) Greece 
B) Norway 
C) Germany 
D) Australia

Question 16

If the country's interest and amortisation obligations are equal to $1 billion and exports are equal to $10 billion then the country's debt service ratio is equal to:

Accepted Answer

A) 10 
B) 9 
C) 1 
D) 0.1 
A) 10 
B) 9 
C) 1 
D) 0.1

Question 17

The Euromoney Country Risk Index is based on a large number of economic and political factors, including a country's economic characteristics, political characteristics, structural characteristics, access to capital and credit ratings, and debt indicators.

Accepted Answer

A) True 
 B)False

Question 18

What does MYRA refer to?

Accepted Answer

A) multi-year repayment agreement 
B) multi-year refinancing agreement 
C) multi-year renegotiating agreement 
D) multi-year restructuring agreement 
A) multi-year repayment agreement 
B) multi-year refinancing agreement 
C) multi-year renegotiating agreement 
D) multi-year restructuring agreement

Question 19

Which of the following is an adequate definition of a Brady bond?

Accepted Answer

A) A bond issued by a less developed country that is swapped for an outstanding loan by that country. 
B) A bond issued by a less developed country that serves as collateral for an outstanding loan by that country. 
C) A bond issued by a less developed country that is issued in accordance with the terms of the Brady convention of 1973. 
D) A bond bought by a less developed country in order to stabilise the country's investments. 
A) A bond issued by a less developed country that is swapped for an outstanding loan by that country. 
B) A bond issued by a less developed country that serves as collateral for an outstanding loan by that country. 
C) A bond issued by a less developed country that is issued in accordance with the terms of the Brady convention of 1973. 
D) A bond bought by a less developed country in order to stabilise the country's investments.

Question 20

Some factors that are built into multi-year restructuring agreements (MYRAs) are:

Accepted Answer

A) option and guarantee features that don't allow the lender and buyer (borrower) to choose the currency for repayment of interest and principal 
B) option and guarantee features that allow the lender and buyer (borrower) to choose the currency for repayment of interest and principal 
C) that the maturity of the loan is typically shortened to reduce interest and principal payments 
D) that there are no fees charged for the restructuring of the loan. 
A) option and guarantee features that don't allow the lender and buyer (borrower) to choose the currency for repayment of interest and principal 
B) option and guarantee features that allow the lender and buyer (borrower) to choose the currency for repayment of interest and principal 
C) that the maturity of the loan is typically shortened to reduce interest and principal payments 
D) that there are no fees charged for the restructuring of the loan.

Which of the following statements is true?

Debt repudiations were more common before World War II compared to now.

Both buyers and sellers of LDC debt seem willing to participate in the LDC debt markets for the purpose of rebalancing the country risk exposure on their balance sheets.

Norway was rated as the country with the least chance of default according to the Institutional Investor's 2012 country credit risk ratings.

Which of the following statements is true?

Which of the following statements is true?

All of the following are relevant determinants of sovereign risk exposure: the rate of domestic money supply growth; the variance of export revenue, and the size of the population.

Which of the following statements is true?

Which of these are major segments of the secondary market for LDC debt?

Explain the relationships between a country's probability of rescheduling and the country's: (a) domestic money supply growth (b) debt service ratio (c) investment ratio (d) variance of export revenue

In accordance with the Heritage Foundation, which of the following definitions best represents the term 'economic freedom'?

Multi-year restructuring agreement (MYRA) is the official term for the:

Debt moratorium refers to a delay in repaying interest and/or principal on debt.

Which of the following are normally traded at very deep discounts from 100 per cent?

Which of the following countries was rated as the country with the least chance of default according to the Institutional Investor's 2012 country credit risk ratings?

If the country's interest and amortisation obligations are equal to $1 billion and exports are equal to $10 billion then the country's debt service ratio is equal to:

The Euromoney Country Risk Index is based on a large number of economic and political factors, including a country's economic characteristics, political characteristics, structural characteristics, access to capital and credit ratings, and debt indicators.

What does MYRA refer to?

Which of the following is an adequate definition of a Brady bond?

Some factors that are built into multi-year restructuring agreements (MYRAs) are:

Why Are Financial Institutions Special

The Financial Service Industry: Depository Institutions

The Financial Service Industry: Other Financial Institutions

Risks of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off-Balance-Sheet Instruments

Managing Interest Rate Risk Using Securitisation

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risks

Capital Management and Adequacy

Filters

Exam 12: Sovereign Risk

Which of the following statements is true?

Debt repudiations were more common before World War II compared to now.

Both buyers and sellers of LDC debt seem willing to participate in the LDC debt markets for the purpose of rebalancing the country risk exposure on their balance sheets.

Norway was rated as the country with the least chance of default according to the Institutional Investor's 2012 country credit risk ratings.

Which of the following statements is true?

Which of the following statements is true?

All of the following are relevant determinants of sovereign risk exposure: the rate of domestic money supply growth; the variance of export revenue, and the size of the population.

Which of the following statements is true?

Which of these are major segments of the secondary market for LDC debt?

Explain the relationships between a country's probability of rescheduling and the country's: (a) domestic money supply growth (b) debt service ratio (c) investment ratio (d) variance of export revenue

In accordance with the Heritage Foundation, which of the following definitions best represents the term 'economic freedom'?

Multi-year restructuring agreement (MYRA) is the official term for the:

Debt moratorium refers to a delay in repaying interest and/or principal on debt.

Which of the following are normally traded at very deep discounts from 100 per cent?

Which of the following countries was rated as the country with the least chance of default according to the Institutional Investor's 2012 country credit risk ratings?

If the country's interest and amortisation obligations are equal to $1 billion and exports are equal to $10 billion then the country's debt service ratio is equal to:

The Euromoney Country Risk Index is based on a large number of economic and political factors, including a country's economic characteristics, political characteristics, structural characteristics, access to capital and credit ratings, and debt indicators.

What does MYRA refer to?

Which of the following is an adequate definition of a Brady bond?

Some factors that are built into multi-year restructuring agreements (MYRAs) are:

Why Are Financial Institutions Special

The Financial Service Industry: Depository Institutions

The Financial Service Industry: Other Financial Institutions

Risks of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off-Balance-Sheet Instruments

Managing Interest Rate Risk Using Securitisation

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risks

Capital Management and Adequacy

Filters