A U.S. bank loan to a Mexican manufacturer payable in pesos accepts which risks?

Question

Quizplus · Accepted Answer

The loan is subject to country risk because it is payable in pesos, which are subject to the economic and political conditions of Mexico. The loan is also subject to credit risk because the Mexican manufacturer may not be able to repay the loan. Finally, the loan is subject to currency risk because the value of the peso may fluctuate against the U.S. dollar.

A US Bank Loan to a Mexican Manufacturer Payable in Pesos