Question 8 (a) You have estimated the following political risk spread model from a sample of...
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Question 8 (a) You have estimated the following political risk spread model from a sample of countries in December 2018: SS₁ = bo + b₁PR₁ + b₂ Localį + b3ZRį + Ei with the following estimates: b=0.01, 6, = 0.75, 6, = 0.55, 6, = 0.25 Egypt is in your sample. Egypt has a political index value PR = 0.05 and a sovereign spread SS=0.20. In addition, Egypt's Local = 0.3 and ZR=0.8. What is the political risk spread (PRSS) of Egypt? (b) What are the possible ways to hedge political risks? Question 8 (a) You have estimated the following political risk spread model from a sample of countries in December 2018: SS₁ = bo + b₁PR₁ + b₂ Localį + b3ZRį + Ei with the following estimates: b=0.01, 6, = 0.75, 6, = 0.55, 6, = 0.25 Egypt is in your sample. Egypt has a political index value PR = 0.05 and a sovereign spread SS=0.20. In addition, Egypt's Local = 0.3 and ZR=0.8. What is the political risk spread (PRSS) of Egypt? (b) What are the possible ways to hedge political risks?
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Answer rating: 100% (QA)
a The political risk spread PRSS of Egypt is 021 This can be calculated by plugging in the values for SS PR Local and ZR into the estimated model PRSS ... View the full answer
Related Book For
Financial Theory and Corporate Policy
ISBN: 978-0321127211
4th edition
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri
Posted Date:
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