Question

ABC Bank has made several big loans to a mining equipment manufacturer that sells its equipment to the copper mining industry in Chile. Political unrest in Chile is a source of what kind of risk for ABC Bank?

a. Operational risk
b. Country risk
c. Market risk
d. Liquidity risk

Answer 1

Answer: option (b)

Step-by-step explanation:

Here, in this particular case we can state that the unrest caused in Chile is source of the country risk for the ABC. This risk tends to shed light that the foreign federal or state government will most likely default on their bonds or several other financial agreements. This risk also attributes to the broader idea of extent to which these unrest tends to affect guarantees of the individual i.e. the issuers.