If a County Becomes Less Likely to Default on Its

question 115

Essay

If a county becomes less likely to default on its bonds, what happens to that country's interest rate and exchange rate? Explain.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

Liquidity

The simplicity of converting an asset or security into cash without impacting its market value.

P/E Ratio

The price-to-earnings ratio, a valuation metric comparing the current share price of a company to its per-share earnings.

ROE

Return on Equity, a financial ratio that measures a company's profitability relative to the equity.