Question
Suppose that the current interest rates in Countries X, Y, and Z are similar. In the next quarter, Country X is expected to have a
Suppose that the current interest rates in Countries X, Y, and Z are similar. In the next quarter, Country X is expected to have a weak economy, while Countries Y and Z are expected to experience a 6% growth in their economies. In Country Z, however, a recent political turmoil in the country will raise the credit risk of borrowers in the country. The credit risks in Countries X and Y are expected to remain. Based on the information provided, which country is likely to have the highest interest rate next quarter and why? Complete the following statement:
Country (i) [X/ Y/ Z] is expected to have the highest interest rate because its (ii) [strong/ weak] economic growth is coupled with a (iii) [high/ low] level of credit risk.
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