Introduction to Case Study

Intro

Our model VS S&P

HOW? -> PICK 2 countries , greatest credit rating difference

Discuss WHY

1. do regressions on each factor => how the factor affect S&P's overall rating

look into how each single factor

By doing this=> WE FOUND OUT : just one factor not enough to Rate

PROVE:

the model predicted credit rating (the red dot) and the actually S&P rating (the blue dot).

FINDINGS : X only consider one factor to attribute sovereign risk

2 WHAT WE USED?

6 factors Debt service ratio, Export, Import, GDP growth rate, GDP per capita and money growth rate

6 factors' Regression result

POSITVE related sovereign risk include x3

that debt service ratio, import ratio and money growth rate

NEGAITVE related sovereign risk include x3

export ratio, GDP growth rate and GDP per capita

higher the ratio, lower the risk and thus, higher the credit rating

OUR MODEL shows money growth rate have the highest coefficient in the model

GIVE EG increase money growth 1, risk increase 1.03

OUR MODEL shows debt service ratio have the lowest coefficient in the model

EG

Before expiration, the time value of an in the money call option is always

Answer

equal to zero.

positive.

negative.

equal to the stock price minus the exercise price.

None of these is correct.

1 points

Question 2

The