Infrastructure finance with real estate mortgage finance

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1. Comparing infrastructure finance with real estate mortgage finance, which of the following statement is not true?

a. Value of the underlying asset is the same to the creditor before and after default in real estate mortgage finance.

b. Value of the underlying asset is the same to the borrower before and after default in real estate mortgage finance.

c. Value of the underlying asset is the same to the creditor before and after default in infrastructure finance.

d. Value of the underlying asset is the same to the borrower before and after default in infrastructure finance.

2. What determines the value of a firm?

a. Asset value in the balance sheet

b. Revenue of the firm discounted at the firm’s cost of capital

c. Net cash flows of the firm discounted at the firm’s cost of capital

d. Liability plus equity minus tax expenditure

3. Which one of the following factors would not affect the cost of capital of an infrastructure project?

a. Market risk premium

b. Project cash flows

c. Project Risk profile

d. Financial structure (e.g. debt to equity ratio)

4. Which of the following tasks are involved in the development of infrastructure financial strategies?

a. Contract evaluation

b. Financial structure analysis

c. Risk analysis

d. Technical feasibility analysis

5. Which of the following is (or are) not true about off-balance finance?

a. Investor is limited liability to project loss

b. Investor’s risk profile is less affected by the project

c. Project’s debt to equity ratio has to be lower than the investor’s debt to equity ratio

d. Securitization of project revenue is not allowed in off-balance financing.

Reference no: EM132061465

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