iv. Suppose the loan life coverage ratio, LLCR, is satisfactory for entire period that the debt used to finance a project is outstanding. Then it must be the case that each of the annual debt service coverage ratios, ADSCR, during this period must also be satisfactory. Do you agree with this statement? Explain. Comment on the following Kyoto Protocol flexible mechanisms Emission Trading b. Clean Development Mechanism Joint Implementation c. Differentiate between Environmental Risk and Catastrophic risk. Discuss the impact of the two risk on the insurers and insured, [3 marks each) Question Four (4) How might environmental Finance prepare the current generation for the challenges ahead? How might a person that is arranging the financing of a project change the structure of the financing to improve the annual debt service coverage ratios for the project? Suppose the net present value of a project is positive for a project that has a life of 25 years. The project is financed with a 10-year loan at a 12% interest rate and covering 80% of the cost of the project. It is found that the annual debt service capacity ratios for the first 4 years are all less than one. What do you suggest could be changed to the structure of the financing of the project that might be improving the annual debt service capacity ratios of the project? iii. iv. Differentiate between Carbon Tax and the Cap and Trade concept of reducing carbon emission. In addition, list and explain the macro and micro drivers of carbon price on the Carbon Market Discuss how the insurance industry will use disaster bond and weather derivative to transfer risk to the capital market [3 marks each) Page 3 of 3 ( 11 In (D 11 g, du li, U605 iv. Suppose the loan life coverage ratio, LLCR, is satisfactory for entire period that the debt used to finance a project is outstanding. Then it must be the case that each of the annual debt service coverage ratios, ADSCR, during this period must also be satisfactory. Do you agree with this statement? Explain. Comment on the following Kyoto Protocol flexible mechanisms Emission Trading b. Clean Development Mechanism Joint Implementation c. Differentiate between Environmental Risk and Catastrophic risk. Discuss the impact of the two risk on the insurers and insured, [3 marks each) Question Four (4) How might environmental Finance prepare the current generation for the challenges ahead? How might a person that is arranging the financing of a project change the structure of the financing to improve the annual debt service coverage ratios for the project? Suppose the net present value of a project is positive for a project that has a life of 25 years. The project is financed with a 10-year loan at a 12% interest rate and covering 80% of the cost of the project. It is found that the annual debt service capacity ratios for the first 4 years are all less than one. What do you suggest could be changed to the structure of the financing of the project that might be improving the annual debt service capacity ratios of the project? iii. iv. Differentiate between Carbon Tax and the Cap and Trade concept of reducing carbon emission. In addition, list and explain the macro and micro drivers of carbon price on the Carbon Market Discuss how the insurance industry will use disaster bond and weather derivative to transfer risk to the capital market [3 marks each) Page 3 of 3 ( 11 In (D 11 g, du li, U605