Countries A and B have exports of $2 billion and $6 billion, respectively. The sum...
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Finance
Countries A and B have exports of $2 billion and $6 billion, respectively. The sum of principal repayments and interest paid on long-term debt and interest paid on short-term debt for both countries are $1 billion and $2 billion, respectively.
What is the total debt service ratio (TDSR) for each country?
Based only on this ratio, to which country should lenders charge a higher risk premium?
What are the shortcomings of using only these ratios to determine your answer in part (b)?
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