Question 1

France 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 2

Which of the following are risk factors that might influence the variability of a country's export revenues?

Accepted Answer

A) quality risk 
B) quantity risk 
C) country risk 
D) basis risk 
A) quality risk 
B) quantity risk 
C) country risk 
D) basis risk

Question 3

Somalia was rated to be the riskiest according to the Institutional Investor's 2012 country credit risk ratings.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is true in relation to the economic freedom index?

Accepted Answer

A) The economic freedom index includes measures such as prosperity rights regulation, capital flows and black market activities. 
B) The economic freedom index measures a country's economic freedom on a scale of 1 to 5, whereby a scale of 5 implies policies most conducive to economic freedom, while a score of 1 implies the least conducive to economic freedom. 
C) The economic freedom index measures a country's economic freedom on a scale of 1 to 10, whereby a scale of 1 implies policies most conducive to economic freedom, while a score of 10 implies the least conducive to economic freedom. 
D) The economic freedom index does not exist. 
A) The economic freedom index includes measures such as prosperity rights regulation, capital flows and black market activities. 
B) The economic freedom index measures a country's economic freedom on a scale of 1 to 5, whereby a scale of 5 implies policies most conducive to economic freedom, while a score of 1 implies the least conducive to economic freedom. 
C) The economic freedom index measures a country's economic freedom on a scale of 1 to 10, whereby a scale of 1 implies policies most conducive to economic freedom, while a score of 10 implies the least conducive to economic freedom. 
D) The economic freedom index does not exist.

Question 5

Which of the following expressions truly represents the calculation of a country's debt service ratio?

Accepted Answer

A) (interest plus amortisation) divided by exports 
B) (interest plus amortisation) divided by imports 
C) (interest plus amortisation) divided by foreign debt 
D) (interest plus amortisation) divided by GDP 
A) (interest plus amortisation) divided by exports 
B) (interest plus amortisation) divided by imports 
C) (interest plus amortisation) divided by foreign debt 
D) (interest plus amortisation) divided by GDP

Question 6

Which of the following statements is true?

Accepted Answer

A) The import ratio is the ratio of a country's imports to its total foreign currency obligations. 
B) The import ratio is the ratio of a country's imports to its total debt. 
C) The import ratio is the ratio of a country's imports to its total GDP. 
D) The import ratio is the ratio of a country's imports to its total foreign currency reserves. 
A) The import ratio is the ratio of a country's imports to its total foreign currency obligations. 
B) The import ratio is the ratio of a country's imports to its total debt. 
C) The import ratio is the ratio of a country's imports to its total GDP. 
D) The import ratio is the ratio of a country's imports to its total foreign currency reserves.

Question 7

Which of the following is a benefit to the lender in a loan rescheduling?

Accepted Answer

A) The FI may become locked into a particular loan portfolio structure. 
B) Rescheduling may close the market for future loans. 
C) Rescheduling may create interruptions in the flow of international trade since letters of credit may be more difficult to acquire. 
D) The FI may receive additional fees, collateral, and option features on the loan. 
A) The FI may become locked into a particular loan portfolio structure. 
B) Rescheduling may close the market for future loans. 
C) Rescheduling may create interruptions in the flow of international trade since letters of credit may be more difficult to acquire. 
D) The FI may receive additional fees, collateral, and option features on the loan.

Question 8

HIPC stands for:

Accepted Answer

A) heavily import-focused poor countries 
B) heavily indebted poorest countries 
C) highly indebted productive countries 
D) heavily import-focused productive countries 
A) heavily import-focused poor countries 
B) heavily indebted poorest countries 
C) highly indebted productive countries 
D) heavily import-focused productive countries

Question 9

Which of the following statements is true in relation to secondary markets for LDC debt?

Accepted Answer

A) LDC loans change hands when one creditor assigns the rights to all future payments and principal payments to a buyer, hence removing it from the balance sheet. 
B) Liquidity in these markets is low, as the country whose debt is traded needs to consent to the transaction. 
C) Prices for LDC debt are negotiated directly between the purchaser and the seller. 
D) LDC loans change hands when one creditor assigns the rights to all future payments and principal payments to a buyer and prices for LDC debt are negotiated directly between the purchaser and the seller. 
A) LDC loans change hands when one creditor assigns the rights to all future payments and principal payments to a buyer, hence removing it from the balance sheet. 
B) Liquidity in these markets is low, as the country whose debt is traded needs to consent to the transaction. 
C) Prices for LDC debt are negotiated directly between the purchaser and the seller. 
D) LDC loans change hands when one creditor assigns the rights to all future payments and principal payments to a buyer and prices for LDC debt are negotiated directly between the purchaser and the seller.

Question 10

An LDC's export revenues may be highly variable due to quantity risk and price risk.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a country risk assessment service available to outside investors?

Accepted Answer

A) Euromoney Country Risk Index 
B) Economist Intelligence Unit 
C) Sovereign Risk Index 
D) Institutional Investor Index 
A) Euromoney Country Risk Index 
B) Economist Intelligence Unit 
C) Sovereign Risk Index 
D) Institutional Investor Index

Question 12

Which of the following statements is true in relation to the Economist Intelligence Unit?

Accepted Answer

A) The Economist Intelligence Unit rates country risk by combined economic and political risk on a maximum of 100 points scale. 
B) The Economist Intelligence Unit rates the risk based on the spread in the Euromarket of the required interest rate on a country's debt over the LIBOR. 
C) The Economist Intelligence Unit weighs subjective scores allocated by rating officers by the exposure of each bank to the country in question. 
D) None of the listed options are correct. 
A) The Economist Intelligence Unit rates country risk by combined economic and political risk on a maximum of 100 points scale. 
B) The Economist Intelligence Unit rates the risk based on the spread in the Euromarket of the required interest rate on a country's debt over the LIBOR. 
C) The Economist Intelligence Unit weighs subjective scores allocated by rating officers by the exposure of each bank to the country in question. 
D) None of the listed options are correct.

Question 13

Which of the following countries was rated to be the riskiest according to the Institutional Investor's 2012 country credit risk ratings?

Accepted Answer

A) Eritrea 
B) Somalia 
C) Afghanistan 
D) North Korea 
A) Eritrea 
B) Somalia 
C) Afghanistan 
D) North Korea

Question 14

Which of the following statements is true in relation to the Institutional Investor Index?

Accepted Answer

A) The Institutional Investor Index rates country risk by combined economic and political risk on a maximum of 100 points scale. 
B) The Institutional Investor Index is based on the spread in the Euromarket of the required interest rate on a country's debt over the LIBOR. 
C) The Institutional Investor Index weighs subjective scores allocated by rating officers by the exposure of each bank to the country in question. 
D) None of the listed options are correct. 
A) The Institutional Investor Index rates country risk by combined economic and political risk on a maximum of 100 points scale. 
B) The Institutional Investor Index is based on the spread in the Euromarket of the required interest rate on a country's debt over the LIBOR. 
C) The Institutional Investor Index weighs subjective scores allocated by rating officers by the exposure of each bank to the country in question. 
D) None of the listed options are correct.

Question 15

Debt repudiation is the:

Accepted Answer

A) outright cancellation of all current debt obligations by a borrower 
B) outright cancellation of all future debt obligations by a borrower 
C) outright cancellation of all current and future debt obligations by a borrower 
D) changing of the contractual terms of all current debt obligations by a borrower 
A) outright cancellation of all current debt obligations by a borrower 
B) outright cancellation of all future debt obligations by a borrower 
C) outright cancellation of all current and future debt obligations by a borrower 
D) changing of the contractual terms of all current debt obligations by a borrower

Question 16

Which of the following is a list of countries that have followed the course of debt repudiation since World War II?

Accepted Answer

A) China, Cuba, North Korea 
B) Japan, South Korea, Afghanistan 
C) Malaysia, Mexico, Chile 
D) Germany, Argentina, Poland 
A) China, Cuba, North Korea 
B) Japan, South Korea, Afghanistan 
C) Malaysia, Mexico, Chile 
D) Germany, Argentina, Poland

Question 17

Debt rescheduling is the least common form of sovereign risk event.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following expressions truly represents the calculation of a country's import ratio?

Accepted Answer

A) total imports divided by total exports 
B) total imports divided by total foreign currency exchange reserves 
C) total imports divided by total debt 
D) total imports divided by GDP 
A) total imports divided by total exports 
B) total imports divided by total foreign currency exchange reserves 
C) total imports divided by total debt 
D) total imports divided by GDP

Question 19

Concessionality refers to the amount a bank gives up in:

Accepted Answer

A) future value terms as a result of a multi-year restructuring agreement (MYR
A)  
B) nominal value terms as a result of a MYRA 
C) present value terms as a result of a MYRA 
D) compounded value terms as a result of a MYRA 
A) future value terms as a result of a multi-year restructuring agreement (MYR
A)  
B) nominal value terms as a result of a MYRA 
C) present value terms as a result of a MYRA 
D) compounded value terms as a result of a MYRA

Question 20

A possible reason for the high systematic risk of export revenue variance (VAREX) is the:

Accepted Answer

A) tendency of world commodity prices to reflect non-similar economic conditions 
B) sensitivity of this ratio to rising nominal and real interest rates in the developed countries 
C) tendency of prices and world demands for commodities to reflect simultaneously economic conditions 
D) discretionary nature of money supply growth for LDC governments 
A) tendency of world commodity prices to reflect non-similar economic conditions 
B) sensitivity of this ratio to rising nominal and real interest rates in the developed countries 
C) tendency of prices and world demands for commodities to reflect simultaneously economic conditions 
D) discretionary nature of money supply growth for LDC governments

France 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 are risk factors that might influence the variability of a country's export revenues?

Somalia was rated to be the riskiest according to the Institutional Investor's 2012 country credit risk ratings.

Which of the following statements is true in relation to the economic freedom index?

Which of the following expressions truly represents the calculation of a country's debt service ratio?

Which of the following statements is true?

Which of the following is a benefit to the lender in a loan rescheduling?

HIPC stands for:

Which of the following statements is true in relation to secondary markets for LDC debt?

An LDC's export revenues may be highly variable due to quantity risk and price risk.

Which of the following is not a country risk assessment service available to outside investors?

Which of the following statements is true in relation to the Economist Intelligence Unit?

Which of the following countries was rated to be the riskiest according to the Institutional Investor's 2012 country credit risk ratings?

Which of the following statements is true in relation to the Institutional Investor Index?

Debt repudiation is the:

Which of the following is a list of countries that have followed the course of debt repudiation since World War II?

Debt rescheduling is the least common form of sovereign risk event.

Which of the following expressions truly represents the calculation of a country's import ratio?

Concessionality refers to the amount a bank gives up in:

A possible reason for the high systematic risk of export revenue variance (VAREX) is the:

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

France 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 are risk factors that might influence the variability of a country's export revenues?

Somalia was rated to be the riskiest according to the Institutional Investor's 2012 country credit risk ratings.

Which of the following statements is true in relation to the economic freedom index?

Which of the following expressions truly represents the calculation of a country's debt service ratio?

Which of the following statements is true?

Which of the following is a benefit to the lender in a loan rescheduling?

HIPC stands for:

Which of the following statements is true in relation to secondary markets for LDC debt?

An LDC's export revenues may be highly variable due to quantity risk and price risk.

Which of the following is not a country risk assessment service available to outside investors?

Which of the following statements is true in relation to the Economist Intelligence Unit?

Which of the following countries was rated to be the riskiest according to the Institutional Investor's 2012 country credit risk ratings?

Which of the following statements is true in relation to the Institutional Investor Index?

Debt repudiation is the:

Which of the following is a list of countries that have followed the course of debt repudiation since World War II?

Debt rescheduling is the least common form of sovereign risk event.

Which of the following expressions truly represents the calculation of a country's import ratio?

Concessionality refers to the amount a bank gives up in:

A possible reason for the high systematic risk of export revenue variance (VAREX) is the:

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