Question

QUESTION 30

1. With the maturity being equal, from the point of view of a bank lender the facility with a longer average life shows:

   	A.	A higher level of risk.
   	B.	A lower level of risk.
   	C.	The same level of risk.

5 points   

QUESTION 31

1. What condition must be respected for a project finance initiative to be financed with a given financing structure?

   	A.	Operating cash flow > debt service
   	B.	Operating cash flow < debt service
   	C.	Operating cash flow ≥ debt service

5 points   

QUESTION 32

1. Which statement referring to the role of multilateral financial institutions is false?

   	A.	In accordance with their policies, they don’t take on financial commitments in countries with high political risk.
   	B.	They participate in privatization.
   	C.	They also promote private financing.

5 points   

QUESTION 33

1. Not included among bilateral agencies are:

   	A.	Development agencies.
   	B.	Export credit agencies (ECAs).
   	C.	Banks.

5 points   

QUESTION 34

1. Mezzanine finance:

   	A.	Obliges sponsors to inject more capital.
   	B.	Allows senior lenders to benefit from a higher level of protection against bankruptcy of the SPV.
   	C.	Lowers the level of guarantees for all lenders.

5 points   

QUESTION 35

1. The underlying rationale of sensitivity analysis lies in:

   	A.	The creation of a large number of scenarios to show the level of depth attained by the advisor in designing the initiative.
   	B.	The evaluation of the effects which derive from variations of all variables that can impact project cash flows.
   	C.	The evaluation of the effects which derive from variations in key variables that impact the project.

Answer 1

Q 30)

The correct Option is A. Higher level of risk.
The longer the average life of the risk increases as with longer life the uncertainity factor increases and the risk for the lender increases.

Q 31)

The correct Option is A. Operating cash flow > debt service.
The condition for project finance initiative to be financed with a given financing structure the Operating cash flow must be greater than the debt to be serviced as  this would indicate a financially stronger business.

Q 32)

The Option A is correct. The statement is False. The multilateral financial institutions do  take on financial commitments in countries with high political risk.
The other two Options B and C are True as the multilateral financial institutions partcipate in privatization and and promote private financing.

Q 33)

The correct Option is C. Banks are not included among bilateral agencies.
The Development agencies and Export credit agencies (ECAs) are examples of bilateral agencies. The bilateral agencies are government non profit agencies. Banks are not giovernment run and also they are not nonprofit organizations.

Q 34)

The correct Option is C. Lowers the level of guarantees for all lenders. mezzanine finance is an unsecured funding and it lowers the level of guarantees for all lenders.  
The Options A and B are incorrect. Option B is False as the senior lnders gets priority than the banks and senior debt in case of liquidation.

Q 35)

The correct Option is C.
Sensitivity analysis is the exvaluation of effects derived from inputs of key independent variables that impact the dependent variable ie the outcome of project.
The Options A and B are incorrect.
Option A is inorrect as  creation of a large number of scenarios to show the level of depth is scenario analysis.
Option B is incorrect as it says effects which derive from variations of all variables instead of key variables.