Chapter 15 PART 2 TB.pdf

Chapter 15 PART 2 TB.pdf - 1 2 3 4 5 Chapter 15 Sovereign...

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Chapter 15 Sovereign risk test bank questions 1. International bond finance is more likely to be rescheduled than international loan finance because of the relatively fewer lenders involved with a loan finance issue. ( F) 2. Prior to World War II, most international debt was in the form of bank loans. (F) 3. Rescheduling loans is easier than bonds because the same FIs typically form loan syndicates that create cohesiveness in negotiations. (T) 4. Sometimes banks received criticism because domestic governments take special political steps to reduce the probability that foreign borrowers will default or repudiate their debt contracts, an occurrence that could cause financial harm to the domestic banks. (T) 5. “Making a lending decision to a party residing in a foreign country is a two-step decision". What are the two steps involved in such a decision? A. Assessing credit quality of the borrower and sovereign risk quality of the borrower's country B. Assessing political economy risk and exogenous risks C. Assessing sovereign risk quality of the borrower's country and other country risks D.
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