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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Countries cannot be forced to liquidate because they have sovereign immunity.

Countries cannot be forced to liquidate because they control their own legal systems.

Countries cannot be forced to liquidate because there is no international bankruptcy court for sovereign nations.

Countries cannot be forced to liquidate because their assets are difficult to seize and often located within their own borders.

Financial Risk Manager Part 1