B)
dollar depreciated.
C)
euro depreciated.
D)
dollar experienced a capital loss.
52.
When a country makes a loan in its own currency and its currency depreciates, it experiences:
A)
a capital gain.
B)
a capital loss.
C)
a capital depreciation.
D)
neither a capital gain nor a capital loss.
53.
When an individual's income is smaller than his or her expenditure, the individual CANNOT:
A)
borrow money.
B)
draw down his or her savings.
C)
print his or her own money.
D)
take another job to increase his or her income.
54.
A nation with a relatively high country risk factor would MOST likely have:
A)
stable exports and unstable imports.
B)
low levels of external debt.
C)
excessive levels of spending compared with its income and current account surpluses.
D)
unstable exports, a high level of external debt, and excessive levels of spending.
55.
International lenders want to know the likelihood that a nation will repay its debt. Therefore, they rely on:
A)
collateral.
B)
international ratings of country risk.
C)
the faith and credit of the sovereign nation.
D)
advice from the International Monetary Fund (IMF).
56.
To analyze whether an international private or sovereign borrower will repay a loan, creditors resort to:
A)
collateral requirements for loans.
B)
International Monetary Fund expertise.
C)
international credit rating agencies that operate much like they do in sophisticated financial markets.
D)
incentives to repay, such as threats of foreclosure, force, or economic sanctions for delinquent borrowers.
57.
What is country risk?
A)
the risk that the nation will suffer unemployment and inflation as a result of its economic policies
B)
a number of economic indicators reflecting the economic health of the nation that affect the ability of its residents to repay loans
C)
the relative risk of political instability, terrorist attacks, and military capability
D)
the total of the government's national debt plus private debt owed to international creditors
58.
Emerging market countries are:
A)
countries with high levels of income per person that are well-integrated into the global economy.
B)
mainly countries that are growing and becoming more integrated into the global economy.
C)
mainly countries that are not yet well-integrated into the global economy and are not democratic.
D)
countries with low levels of income per person.
59.
Which of the following credit ratings is MOST favorable?
A)
BBB+
B)
BBB–
C)
CC
D)
D
60.
A credit rating of A means:
A)
easy access to low-interest loans.
B)
more limited credit and possibly punitive interest rates.
C)
higher interest rates.
D)
you can set your own interest rates.
61.
What remedy does an international lender have against a foreign borrower who defaults?
A)
It can foreclose on the collateral and sell it.
B)
It can sue the borrower in the international credit court.
C)
The national government will always pay up and make the loan good.
D)
Usually, there is no remedy.
62.
Governments affect international financial relationships through their policy regimes. These might include:
A)
economic philosophies like liberalism and Marxism.
B)
laws or regulations affecting investment, reserves, or credit.
C)
larger sets of rules that define a general context to which specific laws or regulations conform.