A short-term debt to international reserves ratio of greater than 100 percent means that
A) the country is financially sound.
B) bankers are borrowing too much.
C) there is not enough reserves to meet international settlements.
D) the stock market is overheated.
E) foreign direct investment exceeds portfolio investment.

Question

Quizplus · Accepted Answer

A short-term debt to international reserves ratio of greater than 100 percent indicates that a country may not have sufficient reserves to meet its international obligations, and is therefore at risk of defaulting on its debts. This is not a sign of financial soundness or a stock market overheating. It is also not related to borrowing by bankers or the relative amounts of foreign direct investment and portfolio investment.

A Short-Term Debt to International Reserves Ratio of Greater Than