You are considering investing in Sovereign bonds. You got some advices from the financial adviser in your local bank. Which one of the following advices does make sense to you:
A) Unlike a corporate, a country facing difficulty meeting its financial obligations typically has the option to print more currency. Therefore, sovereign debts have no default risk.
B) Unlike other countries member states of the European Economic and Monetary union facing difficulties meeting its financials obligations can always turn to european central bank to ask for help. Therefore, the possibility of default within EMU is zero.
C) since member states of EMU all use a unique currency all these countries in the union are essentially exposed to the same default, inflation and currency risk.
D) ''Inflating away'' the debt is not necessarily better for investors than an outright default.