When the Government of a Country May Possibly Default on Its

question 25

Multiple Choice

When the government of a country may possibly default on its bond payments to outside investors,the risk is referred to as

• A) political risk.
• B) nationalization risk.
• C) sovereign risk.
• D) business risk.

---

Definitions:

Cash Discount

A reduction in the invoice price given by the seller to the buyer for quick payment within a specified period.

Merchandise

Products that a company buys to resell to its customers.

Cash Paid

The actual outflow of cash during a period for expenses, investments, and other financial activities.

Perpetual Inventory System

An inventory tracking system where updates are made continuously as transactions occur, providing real-time inventory levels.