Financial Risk Manager Part 1
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When a firm defaults, its creditors usually have the right to force it to liquidate so that the situation will be resolved. However, this is not the case when a country defaults. Which of the following statements is the most accurate regarding the modern understanding of country defaults?
When a firm defaults, its creditors usually have the right to force it to liquidate so that the situation will be resolved. However, this is not the case when a country defaults. Which of the following statements is the most accurate regarding the modern understanding of country defaults?
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A
Creditors can force a country to liquidate its assets to repay its debts.
B
Countries typically default only when they are unable to make debt payments due to insufficient foreign currency reserves.
C
Sovereign defaults are usually resolved through negotiated restructuring rather than liquidation.
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