One Reason Why Debt Rescheduling Is Easier Than Debt Repudiation

question 73

True/False

One reason why debt rescheduling is easier than debt repudiation is that many international loan contracts contain cross-default provisions that serve to prevent a country from selecting a group of weak lenders for special default treatment.

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Definitions:

Convertible Bonds

Debt securities that can be converted into a predetermined number of the issuing company's shares, usually at the bondholder's option.

Bullwhip Effect

A phenomenon where small fluctuations in demand at the retail level cause progressively larger fluctuations in demand at the wholesale, distributor, and manufacturer levels.

Retailers

Businesses that sell goods or commodities directly to consumers.

Wholesalers

Businesses that buy goods in large quantities from manufacturers and sell them in smaller quantities to retailers or other businesses.