The risk of a government's ability to repay its debt owed to international lending institutions is known as:
A)market risk.
B)credit risk.
C)operational risk.
D)sovereign risk.
E)legal risk.

Question

Quizplus · Accepted Answer

The risk of a government's ability to repay its debt owed to international lending institutions is known as sovereign risk. Sovereign risk is a type of credit risk that applies specifically to governments. Market risk refers to the risk of financial loss resulting from changes in market prices. Operational risk refers to the risk of financial loss resulting from inadequate or failed internal processes, systems, or external events. Legal risk refers to the risk of financial loss resulting from lawsuits or other legal issues.

The Risk of a Government's Ability to Repay Its Debt