Topic 7 Part 1

What best describes the information quality problem when dealing with foreign businesses?

• Unavailability of information about borrowers

• Different accounting systems lead to poor quality information

Why sovereign risk is difficult to handle?

• Banks have low liquidity

• Corruptions

• A government is so strong to be sued

• The location is far away from a bank's home country

What is the key difference between country and sovereign risks?

• The defaulting parties

• The amount of defulted loans

• The time of the defaults

• The departments handling these risks

Transfer risk causes a borrower to

• unable to apply for a loan from an international bank

• unable to repay the loan to its international lender

• unable to generate income to repay the loan

• unable to pay government tax

What is qualitative analysis in country risk assessment?

• Analysis on a country's financial information such as GDP, unemployment rate, inflation rate, etc.

• Analysis on non-quatifiable information such as political stability, credit culture, etc.

• Analysis on bank financial statements such as balance sheets and income statement

• Analysis in the interest rate fluctuations in a country

Unqualified politicians are appointed based on political postition but not based on required skills. This situation is related to?

• Experience of government officials

• Corruption

• Ethnic tension

• Political intrusiveness

Monetary policy is about

• Interest rate policy that affects people spending

• Governmet tax policy that affects government revenue

• Government policy towards the foreign bank entry

• Governement policy in dealing with soverieign debt

Why natural resources are important in analysing country risk?

• To keep the monetary policy strong

• To keep the interest rates low all the time

• To ensure the country can generate output to export and receives income

• To ensure corporate tax can be collected