Matakuliah
Tahun
: Keuangan Internasional
: 2009
Political and Country Risk
Pertemuan 11
Soal 1
• Exercise (Question 3)
Suppose an MNC is considering investing in
Bolivia. Will an overall assessment of Bolivia’s
country risk suffice to understand the political
risk present in the investment ?
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Jawaban Soal 1
• First, an analysis of country risk may definitely be
informative about political risk in a narrow sense.
The better a country’s economic situation, the less
likely it is to face political and social turmoil that will
inevitably harm foreign and domestic companies.
However, as the answer to question 1 notes, country
risk is broader than political risk. Consequently, the
MNC should try to find measures and analyses that
focus more narrowly on political risk in Bolivia (such
as the political risk ratings from the PRS group).
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Jawaban Soal 1
•
Second, the industry in which a multinational corporation
operates can affect its exposure to political risk. Calculating a
company’s industry-specific risk is not as straightforward as
calculating more general political risks. The MNC should
consider issues such as whether it has primarily local
competitors (more subject to political risk) rather than
primarily foreign competitors (less subject to political risk).
Analogously, if the MNC is the source of considerable foreign
exchange earnings for the host country or is the vehicle for
important technology transfer, it might be less subject to
government interference than one without such advantages.
The MNC must also ask whether the region in which it operates
has more or less political risk than Bolivia as a whole. This
raises questions such as: How much power do the country’s
regional governments have versus the national government?
What is the attitude of local communities to the MNC’s
proposed projects? Are there any armed opposition groups in
the area, and how do they view the presence of a foreign
company?
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Soal 2
•
Exercise (Problem 4)
Right at the height of the Mexican peso crisis in January
1995, the default probabilities on U.S dollar
denominated emerging market bonds were quite high.
A British investment bank, assuming that these
bonds would pay 15 cents on the dollar upon default,
calculated a 61 % chance of default on Venezuelan
bonds. Consider a bond with 5 years left to maturity,
paying a coupon of 12 %. The par value is 80 %
collateralized by American Treasury bonds. Assume
that the U.S interest rate is 5 % for all maturities.
6
What is the price of a bond with $ 100 par ?
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Jawaban Soal 2
The first step in the computation is to compute the value of the collateral,
Value collateral $ 80 = $ 62.68
(1.05)5
Year
Discount Factor
No Default Case
Default Case
Cash Flow
Probability
Cash Flow
Probability
1
0.9524
12
0.39
15
0.61
2
0.9070
12
(0.39)2
15
0.61(0.39)
3
0.8638
12
(0.39)3
15
0.61(0.39)2
4
0.8227
12
(0.39)4
15
0.61(0.39)3
5
0.7835
32
(0.39)5
15
0.61(0.39)4
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Jawaban Soal 2
The cash flow in year 5 reflects the coupon of 12 and the noncollateralized part of the par value (20). Note that the probability of
retrieving this $32 in full in year 5 is (0.39)5 = 0.009 < 1%. The current
value of these cash flows is now simply the probability-weighted sum
of the cash flows, discounted using U.S. discount rates. The discount
factor in the 2nd column reflects these interest rates and is given as
n
 1 


 1.05 
for the n-th year in the future. The present value of the “no default”
cash flow is $7.18. The value of the “default” cash flows is $13.77.
Hence, the total value of the bond is:
$62.68 + $7.18 + $13.77 = $83.63.
The collateral represents the most important part of the value.
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Soal 3
• Home Work
Soal 3, merupakan tugas perorangan yaitu setiap
mahasiswa diwajibkan untuk menjawab pertanyaan
(Question dan Problem) yang ada disetiap akhir bagian
masing-masing chapter.
Tugas ini dikumpulkan sebelum perkuliahan pertemuan
berikutnya dimulai.
Mahasiswa menjawab Question 12, 19 dan Problem 5
yang ada di halaman 551 - 552
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