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In the Diagram in Question #13 Above, Where Curve 0ABC

Question 16

Multiple Choice

In the diagram in Question #13 above, where curve 0ABC relates the market value of LDC external debt to the face value of the external debt, the range __________ indicates a situation where debt relief or forgiveness for LDCs would reduce the market value of Commercial banks' holdings of LDC debt but by less than the amount of debt forgiven. In this range, any one bank__________.


A) AB; would not want to forgive debt unless all other banks did also
B) AB; would be willing to forgive debt even though other banks did not forgive debt
C) BC; would not want to forgive debt unless all other banks did also
D) BC; would be willing to forgive debt even though other banks did not forgive debt

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