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  3. countries a and b have exports of $2 billion and $

Countries A and B have exports of $2 billion and $6 billion, respectively. The sum...

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Finance

Countries A and B have exports of $2 billion and $6 billion, respectively. The sum of principal repayments and interest paid on long-term debt and interest paid on short-term debt for both countries are $1 billion and $2 billion, respectively.

What is the total debt service ratio (TDSR) for each country?

Based only on this ratio, to which country should lenders charge a higher risk premium?

What are the shortcomings of using only these ratios to determine your answer in part (b)?

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