A Digital Default Option

question 9

Multiple Choice

A digital default option

• A)always pays the par value of a loan if exercised.
• B)has a payout that is capped at 80 percent of the par value of the loan.
• C)will cause the FI never to lose more than the premium paid to purchase the option.
• D)always pays the par value of a loan if exercised and will cause the FI never to lose more than the premium paid to purchase the option.
• E)always pays the par value of a loan if exercised and has a payout that is capped at 80 percent of the par value of the loan.

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Definitions:

Foreign Investment

Investment by individuals, companies, or governments in businesses or assets located in another country.

Economic Growth

The increase in the production of goods and services in an economy over a period of time, typically measured by the rise in GDP.

Technology

Is the practical application of scientific principles.

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, leading to increased interconnectedness.