QUESTION 2

1. A "high additionality loan," according to Michael McCreless' presentation " Toward the Efficient Impact Frontier Baruch College, April 2018 , is a loan that all banks are willing to provide in the financial system.

   True

   False

QUESTION 3

1. According to Michaels presentation Challenging Perspectives on Impact Investing which of the following is true? Select all that apply.

   	a.	Root Capital uses a 10-point expected impact rating scale to evaluate loans
   	b.	Root capital makes venture capital investments
   	c.	The hurdle rate is used to screen out unprofitable low impact loans
   	d.	The hurdle rate is used to eliminate loans with negative net income

QUESTION 4

1. Which factor in the Root Capital portfolio simulation spreadsheet is captured in the factor "k" in the break even interest rate formula R = k/[q+(1-q)p] used earlier this semester?

   	a.	Gender inclusion
   	b.	Expected Cost of Debt
   	c.	Expected Net Loan Income
   	d.	Loan Additionality

QUESTION 5

1. Using the Root Capital spreadsheet, create a portfolio for an investor who wants to invest in debt instruments located in East Africa which target Gender Inclusion. You must generate a minimum return of 2% on a $5 million investment in debt instruments. All loans must have positive expected Net Loan Income. Your projected loan portfolio contains ____ loans which generated _____ in net income and have a ______ probability of default.

   	a.	7, $80,078, 2.24%
   	b.	None of these
   	c.	5, $76,854, 2.27%
   	d.	20, $(108,691), 3.03%

QUESTION 6

1. Using the Root Capital data, analyze the sub-portfolio of loan investments in Central America that are in Climate Change Hotspots, and which are considered areas of Extreme Poverty. Your sub-portfolio contains 18 _____________ industry loans, located in ________, with a ______ rate of return.

   	a.	None of these
   	b.	coffee, Nicaragua, negative 2%
   	c.	coffee, Costa Rica, negative 2%
   	d.	coffee, Uganda, positive 1%

QUESTION 7

1. Using the Root Capital investment spreadsheet data, a portfolio which contains all 82 of the extreme poverty designation loans will generate a positive rate of return.

   True

   False

10 points

QUESTION 8

1. You are Root Capital, and your investor is interested in biodiversity conservation. S/he wants to support businesses that are implementing practices that improve sustainable livelihoods for farmers living in biodiversity hotspots, and thereby reduce the need for these farmers to clear high-conservation value forests or poach plants and animals from within those forests. This investor wants to recover any capital invested, but isn't sure what level of positive financial return to expect on this investment strategy. In order to complete the analysis, you must first find all loans that are considered "livelihood improvement" under Social Performance, and then determine the subset that are also designated as in a "biodiversity hotspot" in the Environmental Vulnerability analysis. (You should not select any of the Environmental Performance factors or any scale of Farmers & Employees in the data to complete the analysis.)

   Develop a portfolio of the 10 best loan investments from the Root Capital spreadsheet that you can present to this investor, where the "best" investment is defined as the highest "Expected Net Loan Income" per loan. Which description below describes the portfolio of the 10 "best" loans?

   	a.	10 loans across Asia, Central America and South America, generating $146,663 of Expected Net Income and a 3% Return.
   	b.	None of these
   	c.	10 loans across Asia, Central America, and South America and East Africa, generating $156,806 of Expected Net Income and a 3% Return.
   	d.	10 loans across Central America, and South America and East Africa, generating $178,750 of Expected Net Income and a 2% Return.

QUESTION 9

1. You are Root Capital, and your prospective investor is a multilateral development finance institution (e.g,. World Bank, African Development Bank) that wishes to invest in coffee and cocoa agricultural businesses in Africa. They want to provide capital where commercial banks are not willing to provide loans, which are considered "medium additionality" and "high additionality" loans. They are willing to invest up to $5 million in debt (i.e., total loan portfolio amount) and provide $250,000 in grant funding (i.e., cover up to $250,000 of negative total expected net income) to do so.

   What is the best portfolio of 20 loans you can create to meet their expectations, where "best" is defined as highest "Expected Net Loan Income"?

   	a.	Expected total income of negative $328,137 and negative 6% return.
   	b.	None of these.
   	c.	Expected total income of $6,160 and 0% return.
   	d.	Expected total income of negative $239,012 and negative 5% return.

QUESTION 10

1. Using Root Capital's portfolio data, create a portfolio which contains all loans that finance "Clean & appropriate tech for reduced emissions and resource efficiency". Which of the below is a correct description of your portfolio?

   	a.	Coffee industry investments in water scarcity hotspots generating a negative 4% return
   	b.	Coffee industry investments in biodiversity hotspots generating a negative 4% return
   	c.	None of these
   	d.	Coffee industry investments in low poverty areas generating positive 1% return