Question
The Debt-to-GDP Ratio is the most common statistic used to measure a country's debt burden . (It's analogous - but not equivalent - to comparing
The Debt-to-GDP Ratio is the most common statistic used to measure a country'sdebt burden. (It's analogous - but not equivalent - to comparing your personal debt with your annual income.) However, as with private entities, a country's "creditworthiness" is determined by a number of factors, such as consistency in interest payments, existing wealth in assets, political stability, and history of default.
Using theCIA FactBook Country Comparisons - Public Debt page (https://www.cia.gov/the-world-factbook/field/public-debt/country-comparison) Comepare China and Somalia. , look up the estimate for the Debt-to-GDP Ratio for China and Somalia.
Then use Wikipedia's "List of Countries by Credit Rating" page (https://en.wikipedia.org/wiki/List_of_countries_by_credit_rating) to get a sense of how the financial sector views its bonds. (Again, note the year cited, and if you choose to use a different source, be sure to mention it in your comment.)
Post one (1) comment on this discussion thread summarizing the information that you found. Then answer the following questions: Based on the Debt-to-GDP Ratio, what would you conclude about the level of riskiness involved in purchasing the country's bonds? Is that consistent with how agencies are rating their bonds? What other factors do you think might be more important to determine this country's credit rating. (Again, include any additional sources used.) This comment should be a minimum of three complete sentences long.
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