Why may equity finance be preferred to debt finance for developing countries?
A) A fall in domestic income automatically reduces the earnings of foreign shareholders without violating any loan agreement.
B) There are laws insuring against any default with equity finance.
C) The risk is shared between debtor and creditor with debt finance.
D) The tax structure leaves equity finance unconstrained.
E) Repayments are unaffected by falls in real income.
A
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A nation has an unfavorable balance of trade when
a. it has a surplus in its balance of payments b. it has a deficit in its balance of payments c. the value of its imports of goods is greater than the value of its exports of goods d. its current account is in surplus and its capital account is in deficit e. it has high tariffs
A nation's merchandise trade balance reflects
a. trade in tangible products b. value of exports c. value of imports d. the same information as its balance of payments e. trade in tangibles and intangibles