Test XI: "International Project Finance"

In case of a project finance:
1. the financing is not primarily dependent on the credit support of the sponsors
2. the financing is primarily dependent on the credit quality of the sponsors
3. debtholders don't place a substantial degree of reliance on the performance of the project itself
4. the investors aren't separated from the project
The promoter of a project financing is usually:
1. the government
2. the sponsor
3. the constructor
4. the leadership bank
Sponsors in international project finance usually include:
1. government and other public agencies
2. banks and promoters.
3. construction, supply, management companies.
4. locally registered unit trusts
The role of the sponsor in international project finance is:
1. to prospect the earning dividends
2. to build the construction
3. to grant non-guaranteed funds to the constructor for a determined period of time
4. to hold the investment for a minimum period
The government’s objective in international project financing is:
1. to indicate the best location for the investment
2. to provide affordable and best value-for-money services to the end-user.
3. to analyse the project;
4. to reduce the tax applicable to the project financing.
When the banks’ level of commitment in raising funds is a “firm commitment”:
1. the bank will underwritting the finance
2. the bank will be required to furnish the funds even when it has failed to raise other funds.
3. the bank will try to act as a leadership bank
4. the leader bank will contact a consortium in order to have a higher chance to obtain the funds.
Public participation in the financing of a project usually comes:
1. in the same time with the sponsor
2. at the operating stage
3. only at the recommendation of the promoter
4. only if the banks agreed.
In the determining of the project feasibility we do not include:
1. the strength and experience of the project sponsors
2. the project fundamentals and economics indicators
3. the financial covenants
4. the credit of the project participants
5. the government disposal to reduce the taxation
The availability risk in case of a project finance represents:
1. the risk that the services provided by the private sector party may be less than required under the contract with the public sector.
2. the construction and design risk.
3. the risk that the other parties to an agreement being unable to meet their contracted obligation
4. the risk that the actual inflation rate will exceed the risk projected during the development of the feasibility study.
Completion (technical and timing) risk
in case of a project finance represents:
1. the risk that the services provided by the private sector party may be less than required under the contract with the public sector.
2. the construction and design risk.
3. the risk that the other parties to an agreement being unable to meet their contracted obligation
4. the risk that the actual inflation rate will exceed the risk projected during the development of the feasibility study.
Counterparty credit risk in case of a project finance represents:
1. the risk that the services provided by the private sector party may be less than required under the contract with the public sector.
2. the construction and design risk.
3. the risk that the other parties to an agreement being unable to meet their contracted obligation
4. the risk that the actual inflation rate will exceed the risk projected during the development of the feasibility study.
Force majeure risk is generally taken on by:
1. the sponsors
2. the banks
3. the promoters
4. the public investors
Due diligence is:
1. the process of examining the financial underpinnings of a corporation
2. the additional guarantees required by banks
3. the analyse of the constructor's managerial skills
4. the disponibility of the government to attract additionl funds.
The solution for completion risk mitigation is:
1. keeping adequate cushion in assessment.
2. Contractual guarantees from manufacturer, selecting vendors of repute.
3. Hedging
4. Insurance
5. Making provisions.
The solution for price risk mitigation is:
1. keeping adequate cushion in assessment.
2. Contractual guarantees from manufacturer, selecting vendors of repute.
3. Hedging
4. Insurance
5. Making provisions.
The solution for resource risk mitigation is:
1. keeping adequate cushion in assessment.
2. contractual guarantees from manufacturer, selecting vendors of repute.
3. hedging
4. insurance
5. Making provisions.
This is not a disadvantages of Project Financing:
1. Higher transaction costs due to creation of an independent entity.
2. Extensive contracting restricts managerial decision making.
3. Project debt is substantially less expensive due to its non-recourse nature.
4. Often takes longer to structure than equivalent size corporate finance.
In case of a project finance the concesion contracts are provided by:
1. the sponsors
2. the government
3. the banks
4. the public investors
Project finance is:
1. larger than IPO;
2. is more reduced than venture capital market;
3. is larger than bond market;
4. larger than securities market.
In case of project financing, are dominant:
1. credits
2. bond financings
3. equity financings
4. syndicated loans (MLA / BLA)
In case of project finance are dominant:
1. Projects with bond financings
2. Projects with equity financings
3. Projects with loan financings
4. Projects with external debt financings.
The fees (underwriting) paid to the bank for providing a firm commitment are:
1. more expensive than for a best efforts arrangement.
2. less expensive than for a best efforts arrangement.
3. similar than for a best efforts arrangement.
4. different if the projects are financed by bond issuing.
Underwriting fees in case of bank financings are not dependent on:
1. the size of the project
2. the type of security
3. the risk associated with the project
4. the level of commitment provided by the bank
5. the number of participants at the project finance.
The fees for raising equity for a project finance are generally:
1. higher than for raising debt;
2. lower than for raising debt;
3. higer than for reinvesting the own profits;
4. are deductible from the net income.
The suppliers’ primary interest in the project is usually:
1. the supply contracts with the project company.
2. the raising of funds from equity or debt market;
3. to provide the affordable and best value-for-money services to the end-user.
4. the prospect of earning dividends or appreciation on their investment, and in achieving their social objectives.

Test XI: "International Project Finance"

Multiple Choice Test