1.Which of the following reasons most completely describes why country risk assessment is prone to error?
　　A. While data is accurate, it is often incomplete.
　　B. Different accounting standards are used in different countries.
　　C. Disclosure requirements are inconsistent across international borders.
　　D. The exchange rate correlations are unstable during economic downturns.
　　2.An experienced commodities risk manager is examining corn futures quotes from the CME Group. Which of the following observations would the risk manager most likely view as a potential problem with the quotation data?
　　A. The volume in a specific contract is greater than the open interest.
　　B. The prices indicate a mixture of normal and inverted markets.
　　C. The settlement price for a specific contract is above the high price.
　　D. There is no contract with maturity in a particular month.
　　3.The risk-free portion of the bank’s exposure is defined as:
　　A. (1 - α) × credit line.
　　B. (1 - α) × drawn funds.
　　C. α × credit line.
　　D. α × drawn funds.
　　Answer:
　　1.D
　　In addition to contagion, there are other reasons why country risk assessment is prone to error. First of all, the interrelationship among the relevant variables is complex and hard to model. Also, many sovereign and foreign borrowers provide incomplete and/or inaccurate information.
　　2.C
　　The reported high price of a futures contract should reflect all prices for the day, so the settlement price should never be greater than the high price.
　　3.A
　　Since α represents percent of funds drawn down, you can eliminate two of the answer choices. The risky exposure is the amount of drawn funds so (1 - α) denotes the amount of the total credit line not used and hence not exposed to risk.