Borrowers Can (And Sometimes Do)default on Their Loans When

question 88

Multiple Choice

Borrowers can (and sometimes do) default on their loans when

• A)the dividend yield on their shares of stock reaches zero.
• B)they convert their bonds into perpetuities.
• C)they declare bankruptcy.
• D)they cannot find enough buyers of their bonds to sell all the bonds they wish to sell.

---

Definitions:

Foreign Direct Investment

A company or individual from one country investing in another country by either setting up business operations or buying business assets there.

Foreign Portfolio Investment

Investment in a country's securities, such as stocks and bonds, by non-resident investors, not aiming for control but rather intended for financial return.

Net Capital Outflow

The difference between the domestic purchase of foreign assets and the foreign purchase of domestic assets over a given period, reflecting the flow of capital from and into a country.

Barriers To Trade

Measures imposed by governments or policies that restrict or restrain international trade, through tariffs, quotas, or other regulations.