On September 10,1990 the published prices (cents on the dollar) on Latin American bank debt was quoted as follows:
Assume that the central banks of Mexico,Venezuela,and Chile redeemed their debts at 50 percent,85 percent,and 76 percent,respectively,of face value in a debt-for-equity swap.If the three countries had equal political risk,based purely on financial considerations,the cost of a $40,000,000 assembly plant investment in local currency would be ranked (lowest to highest) in dollar cost as follows:
A) Venezuela first, Mexico second, Chile third
B) Venezuela first, Chile second, Mexico third
C) Chile first, Venezuela second, Mexico third
D) Mexico first, Chile second, Venezuela third
Correct Answer:
Verified
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