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Soccertom9

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What are 6 country risk analysis techniques used to evaluate emerging market economies? (Hint: 6 questions to ask)
 
I can’t recall them off the top of my head, but I can’t see the CFA asking us to recite lists like this. Better to understand the logic behind them.
 
abushey31 you are 100% right. This is a level 10 on the difficulty scale. (basically unfair) If you are able to recall all 6, then basically you know that material inside out.
 
Los 23.k: Discuss the risks faced by investors in emerging market securities and the country risk analysis techniques used to evaluate emerging market economies.
The question is fair game so it could be tested.
 
Reserves/Current Account Deficit < 200%
Deficit/GDP > 4%
Long Term Debt to GDP > 50%
Economic Growth < 4%
High Inflation
As warning signs. Turn them around they are positives.
I can’t remember the 6th. Do I get partial credit?
Oh oh, I remember it. External Debt to Reserves, but I can’t remember the percentages.
 
You cease to amaze me.
1) Responsible fiscal / monetary policities
2) Expected growth
3) Reasonable Currency values / current account deficit
4) Country too highly levered
5) F/X Reserves
6) Government stance regarding structural reform
 
Structural reforms and openness was the one I was missing, oh well close enough.
 
“Los 23.k: Discuss the risks faced by investors in emerging market securities”
Someone once posted “C-PUTTER”
Currency risks
Political risks
Unfamiliarity
Tax withholdings
Transaction costs
Efficiency of information (skewed information sets between locals and foreign investors)
Regulatory (capital flow and restirctions on foreign ownership)
I would think this is more testable, but big-ups for posting
 
Cost is always my goto answer if I don’t know something. Amazing how much it works.
Why choose A over B. B is higher cost.
 
I would be really surprised if asked to vomit out a mechanically memorised list of all six. 1, 2 or even 3 would seem more likely.
I am all for an intelligent question to discuss / compare one or more but then again…as they say anything is fair game.
 
CFASniper Wrote:
——————————————————-
> I would be really surprised if asked to vomit out
> a mechanically memorised list of all six. 1, 2 or
> even 3 would seem more likely.
>
> I am all for an intelligent question to discuss /
> compare one or more but then again…as they say
> anything is fair game.
I have been shocked at how much info they give you on the practice exam. Even for behavioral finance 3 of the 4 tests they gave the term and asked for the definition.
 
Pretty sure you can get full credit if you answer this essay question like so (written in pen):
8===D
 
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