What is a reasonable factor that may increase the safety of loans made to sovereign governments by banks?

____

A) If a foreign government refuses to repay, the dispute can be easily settled in the International Court of Justice in Hague

B) Unlike corporations, a country always gives highest priority to loan repayment to foreigners

C) Inflation often makes repayment easier for foreign countries

D) A country is less likely to go out of business than a firm is

4. The following is the foreign currency position of a financial institution, expressed in dollars.

Currency	Assets	Liabilities	FX Bought	FX Sold
Japanese yen ()	$75,000	$30,000	$12,000	$88,000

What is the expected loss or gain if the exchange rate appreciates by 2%?

____

1. $760
2. -$450

C) -$620

D) $300